Specialist lenders optimistic over Brexit

Specialist lenders optimistic over Brexit

Market turmoil following the EU referendum is likely to be temporary and could make way for a number of benefits, according to Bob Sturges, Head of PR & Communications at Fortwell Capital.

Bob said that the financial shock caused by a vote for Brexit, which saw shares prices plummet and a major drop in the value of the pound, is outweighed by a promising future. 

“…The market turmoil seen in the aftermath of the referendum should be treated with a degree of scepticism,” Bob insisted.

“Not only was it widely anticipated in the event of a vote for Brexit, but was made worse by the actions of traders who called the outcome wrong and strove to regain their subsequent losses.

“We believe, [that] over time, they will settle and begin to behave more rationally.”

Bob claimed that some of the seemingly negative impacts of the referendum may actually be positives in disguise.

He explained that a depreciation in the value of sterling could attract wealthy overseas investors, and that borrowing may climb as interest rates fall.

“Already, we are seeing firm evidence of buyers re-entering the market – particularly in prime central London – after a prolonged period in which investment decisions were put on hold,” Bob added.

“That there will be losers as well as winners as a result of the vote, and its as-yet undefined implementation, is not in doubt.

“But on balance, we believe our economic prospects over the medium- to long-term remain highly promising.”

Despite Bob’s calm outlook, some firms have already reacted to the referendum results.

Precise Mortgages sought to take advantage of the turmoil by announcing a new range of cheaper products in response to a drop in the cost of five- and 10-year money.

On the other hand, LendInvest temporarily paused lending on second charge bridging and commercial cases, while also tightening its rules for deals worth more than £3m.

Mike Strange, Managing Director of Funding 365, warned that loans may suffer as a result of too many negative reactions.

He said: “Brexit has resulted in a fairly immediate and marked reduction in risk appetite from many bridging lenders. 

“There has also been an immediate negative reaction from valuers, which will likely result in down valuation for many loans that are currently in the process of being underwritten – this may result in many terminated loan applications.”

But it was not just specialist lenders who were affected.

On 27th June, Royal Bank of Scotland (RBS) and Barclays shares were temporarily frozen after share prices fell by a certain percentage threshold.

Scott Marshall, Director at bridging lender Roma Finance, insisted that specialist lenders would overcome the turmoil.

“…I understand that uncertainty can bring caution to any market, but specialist lenders have been through turbulent times before and adjusted accordingly to help achieve the most appropriate outcome for borrowers.

“It's the same now, the specialist lending market will react appropriately to continue to offer an alternative to the mainstream funders."

By contrast, Joshua Elash, Director of specialist lender MTF, claimed there is a clear difference between the 2008 recession and the current market decline.

“Brexit can be distinguished from the 2008 financial crisis as there is no underlying, fundamental lack of liquidity.”

Joshua believed that Brexit could boost the financial sector.

“The UK’s banking sector remains robust and it is considered that Brexit will lay the foundations for the long-term strength and growth of the UK economy, which is, and will remain, one of the most significant economies in the world.”

However, Bob was adamant that it was mainly specialist lenders who were set to gain from a Brexit.

“…The big banks will be profoundly affected by Brexit.

“This is likely to shrink further their already sparse appetites for risk.

“As they retreat to review their options, fast-moving, securely funded entrepreneurial lenders will be in position to fill the gap.”

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