Comment
Small lenders starting to make an impact on market
Small bridgers can boost the market by developing products for exit themselves
by Julian Ingall, director,
Coreco Specialist Finance
I’ve become increasingly frustrated over the past few months regarding the bureaucratic nature of many companies in our associated industry, mainstream lending.
When a company or institution becomes too big the cogs in the wheel start to slow. Many of the departments of larger lenders are frustrated internally by the constant change of policy and I believe that the main problem in any organisation starts with self preservation factor which then leads to internal politics and one- upmanship.
PERSONAL RELATIONSHIPS It was Richard Branson who once was quoted stating that no company should be have more than 60 people; the decision process should be within this group. The most important factor with companies up to this size is that all individuals are known to each other on a personal basis. I turn to our industry and look at the 70-plus companies, many of which have popped up over night and well done to you all for creating a competitive space. I’m only sorry that we, the broker,
18 BRIDGING INTRODUCER MAY 2012
can’t support you all. Most of the bridging companies have fewer than a dozen people in number and even our larger bridgers don’t have many more. I guess the added benefit for much of our industry is that very few have any legacy lending problems to distract them from their core business.
LAURELS The bureaucratic and timid credit policy that many banks presently have has allowed our industry to flourish. An entrepreneurial flow allowing a more dynamic approach to solving problems but bridgers should not rest on their laurels. Please keep pioneering your lending offerings and maybe move further up into the mezzanine space of lending, charge higher rates if you need but be more creative with your lending.
EXIT Bridgers are constantly monitoring the long term lending offerings to assess the take out of their loans and as a consequence are to a degree at the mercy of the long term lenders. The buy-to- let market has seen a big push (relatively speaking) in the past six to twelve months and I strongly believe that we should now be pushing some of the boundaries on product in the bridging market.
PRODUCT EDGE
Product is arguably the most powerful marketing angle a lender can have so why not focus on the
exit? This is clearly what Omni Capital does with its powerful in house marketing team that has the ability to sell top end properties. The in house marketing advantage that Omni Capital has allows it the comfort and flexibility on loan to vales meaning it doesn’t have to rely on long term lender product. When are we going to get the larger bridgers pushing some of these boundaries to 65-75% of gross development value on development finance and closing the bridge by using their own products? Surely the likes of Dragonfly, which is probably almost there with its 3-year buy-to-let product, could put this to better use if they wanted to. Equally with the muscle that Precise Mortgages is purported to have it should be able to lend aggressively in the heavy refurbishment and development space.
BIGGER BOOST But I do understand that small isn’t always beautiful as coverage, service capacity and lending amounts are all issues that small businesses constantly battle with and maybe we need the bigger is better bridgers to roll their sleeves up and push the market. The cynic in me believes that the answer will be that they are making enough money right now and don’t need to take any excess risks, in their eyes, as the larger institutions won’t be back in the present space for some time.
www.mortgageintroducer.com
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