4441 Mortgage Introducer Intermediary Ad_Layout 1 02/11/2011 16:06 Page News Review: Bridging


Share-grabbing slammed by Sarah


Davidson, editor,


Mortgage Introducer


War has broken out in the bridging sector with lenders slinging mud at each other over rate cutting tactics to grab market share. Bridgebank


capital slammed new entrants in


the bridging market “with the wrong backgrounds and a total lack of understanding” for trying to con brokers with headline rates they don’t deliver. the association of Short term Lenders is already monitoring the issue of headline rates. But Laurence goodman, chief executive of Bridgebank capital, raised concerns that some of the headline rates advertised by bridging lenders as low as 0.75% per month may be underpricing risk and demonstrating “a huge level of naivety”. He said: “many new entrants have entered the bridging


market with the wrong backgrounds and a total lack of understanding of the product and an inability to price risk, whose wit to procure market share can’t go beyond promotional activities to sell it cheap.” goodman added: “common sense maths clearly demonstrate that unless lenders are working for fees only or ridiculously low margins with zero tolerance for losses, then many of the “low-balling” headline rates promoted are nothing more than a con to try to buy in business.” duncan Kreeger, chairman of West one Loans said: “new entrants have certainly livened things up recently and we’ve seen the competition drive down rates as well as help nudge up LtVs and increase loan sizes.”’ Steve mccoll, partner at bridging specialists Soho


corporate, said the real bridging money is only available north of 1.25% per month and that anything below this level puts all the risk at the lender’s door rather than the borrower’s. He added: “i am sure funders do deliver on advertised headline rates. But at a low monthly rate the underwriting criteria is going to be extremely difficult for a borrower to meet, with every possibility that the case will get kicked out, rate-hiked or loan size chopped.” Lenders new to the market deny using headline rates to grab market share. alan cleary, managing director Precise mortgages, hit back


saying “i am told some lenders are struggling to cope with Precise mortgages’ pricing”. He added: “Precise mortgages has actually done cases on


our 0.75% pm rate for customers who have fallen foul of this trick with another lender. “Let’s not beat around the bush, any lender who is


knowingly advertising a rate it has no intention of doing should be strung up. See this month’s Bridging Introducer for more


mortgage introducer NOVEMBER 2011 29


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