FSA figure of eight months. He’s also keen to reveal that just 15% of his book extends the term of the loan – less than half that of the FSA stats which he says are “unfeasibly high” for a market average.
MORTGAGE MARKET REVIEW It is partly for this reason that bridging was, for the first time, singled out by the regulator and given its own dedicated section in the MMR. Some in the bridging sector view this treatment of short-term lending as a negative and would rather have seen it fall under the regulator’s radar. others believe it is just a heads up that short-term lending will become more heavily regulated in the future; it’s simply a matter of time. But Goodman tells me he thinks
it’s right that bridging should be treated differently from the mainstream residential mortgage market and it’s therefore right it should have its own section in the MMR.
“The FSA is doing an important job with the MMR but I think it has to and is recognising that what bridging does is different from the mainstream mortgage market,” says Goodman. “We’re voicing our feedback to the MMR through the Association of Short Term Lenders and I think that’s the right forum for the industry to talk about MMR. “They’re doing a cracking job making sure that the regulator understands the impact of what they’re suggesting. We’re a regulated lender and I personally have nothing against regulation. I’ve never understood why some lenders wouldn’t be regulated from day dot – what’s the fear? But I do think that some of what the regulator is proposing on capital adequacy for bridging lenders perhaps needs more clarification. “I’m also not convinced that the definition of a short-term loan
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should be less than 12 months. Why can’t it be 18 months? Short- term finance should be looked at as project finance to get you from point A to point B – as long as you understand what your strategy is for getting to point B. Any lender who willingly lends for a longer period isn’t doing their job properly because it is an expensive form of finance but I think a year is restrictive.”
VAULTING AMBITION
Although Goodman is happy with the performance of the book he runs, he admits it’s “a lot smaller at a quantum level” than he’d like. The thing most people notice about Goodman when they come across him at various industry events is this determination. He’s tough. He’s competitive. He doesn’t shy away from a debate and he’ll say what he thinks – up front. There are those who find that hard to deal with but it’s more a reflection of what’s happening to the wider bridging market than it is of Goodman himself. A Manchester boy who’s kept to his roots, Goodman has a wry sense of humour to accompany that tough business persona. More than once he refers to himself as “an old git” with a laugh. What he means is that experience has taught him to be careful what you boast about. “I don’t have a problem with competition and indeed I think more competition has helped to raise the profile of bridging, but I actually think now our profile is too high,” he says. “That might sound a bit silly but when you think that our total market is a fraction of 1% of the total mortgage market to think that we should be 40% plus of the exhibitors at the Mortgage Business Expo is a nonsense really.”
Goodman suggests there should be more of a balance and predicts the marketing noise will die
down this year leaving behind the underlying opportunity for the market to grow. As more and more “new boys” have entered the bridging fray, he has been notably vociferous about some of the fiercer competitive tactics being used to take market share. “We know that there are newer lenders out there trying to buy market share by putting their money out very, very cheap,” he says, grinding an axe he’s ground several times before. “We’re not interested in getting involved in that. “We’re about know-how and service and doing a good job. We’re also going to price risk – that’s what bridging is all about. Getting a return for that risk. It’s wholly incorrect to underwrite and price it like a residential mortgage. They’re miles apart in every respect.
“If some lenders want to put it out that cheap and not make a margin on it, that’s up to them, I can’t stop them. But I’m still of the opinion there’s enough business to go round for everyone. The opportunity for me to grow my book three, four, fivefold is just not an issue at all.” He’s referring to a fairly recent phenomenon in the market which has seen criteria relax, loan to values rise and rates drop from an average of between 1% and 1.5% a month down to a low of 0.6% a month. Many of the incumbent lenders are still pricing at the historical levels but competition is certainly forcing innovation and pricing battles if not wars. “I think it’s probably fair to say that our competitors and some of the new boys who are London- based have stolen a march on us,” admits Goodman. “I’d put my hands up to that although perhaps part of that is to do with geography. Being based up in Manchester means some of the routes available on the
BRIDGInG InTRoDuCER MARCH 2012 29
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