Paresh Raja

Deploying loans quickly

Covid-19 has radically transformed the way different sectors operate — and the specialist finance industry is no exception.

At the height of the lockdown, bridging lenders were put to the ultimate test: not only did they have to ensure their teams of underwriters and legal professionals were equipped to quickly deal with inquiries even when working remotely, there was also the added need to guarantee strong, stable funding lines were in place so loans could be issued without delay.

Without access to in-house credit lines, some lenders were simply not in a position to support commercial and residential property buyers. Thankfully, at Market Financial Solutions (MFS), we have in-house funding, meaning we have been able to provide brokers and private clients with access to bridging loans; indeed, MFS has deployed over £40m of bridging loans since the start of April 2020.

Adapting to the new normal 

The government is doing what it can to get things back to relative normality and reduce the long-term impact of Covid-19 on the economy.

With the property market back open for business, some of the UK’s mainstream lenders – namely, high street mortgage providers – are returning lending. At the same time, there has been a noticeable surge in demand for bricks and mortar, such as prime central London property or BTL investments in regional hotspots like Liverpool and Birmingham. This release of pent-up demand has been attributed to chancellor Rishi Sunak’s introduction of a Stamp Duty Land Tax (SDLT) holiday , which is in place until the end of March 2021.

According to Halifax, house prices increased by 1.6% month-on-month in July, while the annual rate of growth rose by 3.8%.  The chancellor will no doubt be pleased with these results; they are an early indication that the state’s economic stimulus is working.

However, this surge in demand will be short-lived if prospective buyers — first-time house hunters and seasoned investors alike — do not have confidence in both the long-term future of the housing market and their ability to access finance. Importantly, the responsibility for delivering both of those things does not just lie with Westminster — it is also up to lenders to step up and ensure they are doing everything in their power to support property buyers.

Funding with certainty 

Having consulted with our close network of brokers and private clients, one of the issues commonly raised was the challenge of finding lenders able to deploy loans quickly. This is because many adopted a risk-averse position during lockdown, while others may not have access to the necessary funding lines, meaning it takes them longer to advance loans (if they can at all).

This is the reason why MFS recently announced the launch of a dedicated £60m Covid-19 recovery fund, which is set aside to finance bridging loans for property investors and businesses seeking to complete on residential and commercial property transactions. To ensure brokers and buyers can act confidently, the funding is available for immediate deployment for those who meet the necessary requirements.

After reviewing our existing credit lines, this recovery fund will also be topped up as bridging loans are paid out, adding to investors’ confidence in the knowledge they have access to the finance needed to complete on a property sale.

This is just one of many upcoming initiatives MFS is launching to support the UK’s economic recovery. It is this type of confident action that will be vital in fuelling property transactions in 2020, providing buyers with certainty and the ability to press ahead with deals.

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