Are broadsheets cutting out the middle man?

Are broadsheets cutting out the middle man?



798_2022-05-03-11-01-31am.gif
.

As the bridging finance sector expands both in terms of scope and volume, the general public are beginning to recognize the brand names of lenders who were once known exclusively to intermediaries.

This is no doubt due to the growing number of bridging lenders who have chosen to advertise their name and services in broadsheets, online estate agents’ websites and consumer property magazines.

Chris Borwick, Associate at Savills Private Finance, said: “It seems that everyone is trying to get in on the action in the bridging market, as is evident through the emergence of so many new entrants and the market seemingly going more 'mainstream’. 

“Therefore advertising in the broadsheets would seem to be a logical step.”

Yet whilst the adverts may have been broadcast merely to increase brand awareness and may indeed seem like a ‘logical step’, many intermediaries fear that if the advertising induces a greater level of direct business, their role in the lending process will eventually be eroded.

Jonathan Samuels, CEO of Dragonfly Property Finance, said: “There is no doubt that the dynamic between broker and lender would change were a lender to start dealing direct alongside its broker proposition.  

“We do not deal directly with the borrower and neither do we plan to in the future. Brokers are fundamental to our business and perform an invaluable service not just in introducing but also in filtering applicants. Our success is down to them and so we owe them an allegiance.”

However, according to one lender, whose name can be seen in the Times, this type of advertising is in fact beneficial to the broker community.

Duncan Kreeger, Chairman of West One Loans, said: “Firstly I would like to confirm that West One Loans will not be entering into a Dual Pricing situation. The reason for our advert in The Times is purely for brand awareness. We believe that this will help our brokers to offer a household name to their clients.

“Many of our sophisticated brokers also read The Times and are always looking for new lenders. We have already been approached by many brokers/solicitors/accountants who have seen our advert in The Times.

“West One Loans have no intention of circumventing the well established broker/packager network as this is our lifeline.”

 In addition to maintaining a lender-broker ‘allegiance’, for many lenders, the decision to shy away from direct lending and from direct advertising has arisen because, in reality, the process simply does not work.

Yousouf Roze, Director at First4Bridging, said: “I'm sure that advertising of this type will generate enquiries from the general public. But I'm equally sure that those lenders will probably have to spend much of their valuable time and energy sifting through enquiries that more often than not, will not fall within either their lending criteria or indeed the general lending parameters of bridging finance.”

Craig Scott, Director of Commercial 1 Limited, added: “A broker’s part in any bridging transaction is vital as many customers’ applications would not even get past the initial enquiry stage without the expertise, knowledge & professionalism brokers apply to each and every deal. No bridging deal is the same and the tick box underwriting exercise just does not apply anymore.

“I have worked for many banks and lenders over the years in the specialist sector, who adopted the approach of having both retail and wholesale operations. After vast amounts of time, effort and not to mention money, it was fairly evident that after a short period of time the process was very convoluted and a tremendous amount of man power was required. It was not long before they scrapped the retail operations and concentrated on their core distribution channels via intermediaries.

“For lenders to increase their volumes the distribution channel of brokers will always be key.”

According to some though, there may be a way for the adverts arising in broadsheets and other forms of ‘mainstream press’ to provide a channel of business that will not only benefit lenders, but will also provide a source of ‘free business’ for intermediaries.

Mark Posniak, Head of Marketing and Operations at Dragonfly Property Finance, explained: “Dragonfly do advertise through zoopla.co.uk, a website which attracts the buyer rather than the broker. However, any interest or business that comes to us directly from the potential borrower is swiftly directed to one of our key partners.”

And so, for the time being, most intermediaries remain confident that whilst mainstream advertising will no doubt make the public very aware of the funds which they could utilise from a bridging lender, the sector remains too specialised to function without the skills of the broker

Lucy Barrett, Director of Vantage Finance, said: “Each lender has its own distribution strategy which suits their business model but I don't feel this will have a direct adverse affect on my business volumes.

“Bridging is a specialist product where the services of a broker are invaluable.”

That being said, as the public becomes more and more financially savvy, and IT systems evolve to offer help and guidance through the application process, there may come a point when the average borrower feels more than capable of putting together their own bridging application after seeing the services and rates offered by lenders in their morning newspaper.

By Katie-Jill Rowland 
 

Leave a comment