The comment was made during a filmed interview with B&C, when Toorak was asked about the positive outcomes from 2020 that it expected bridging lenders to capitalise on this year.
John responded that the biggest encouragement was the stability of the housing market.
“I think we should all be thankful that we are focused on an industry that’s been very resilient; it’s fundamental to the economies of the places that we work,” he said.
He added that another positive was identifying the opportunity, as an industry, to widen product offerings.
Many of the lenders Toorak works with focus on either bridging, refurb, or, in some cases, BTL loans, with various hybrids of these different products.
He believes that the introspection that took place last year has resulted in lenders questioning which products they weren’t offering and why, something John thinks will constitute a “lasting impact” of the 2020 experience.
Many are now thinking about how they can expand their businesses to better serve their customers.
“A lot of the lenders who are the most successful in the market are the [ones] who can solve the needs of their entire customer base.
“So, it’s not just one product, it’s not just one solution for the customer — it’s the whole gamut of solutions.”
He added that many of the dynamic lenders are using this opportunity to address that and add new products.
He highlighted that he expects the ‘lifecycle lending’ proposition — which is already prevalent in the US bridging market — to occur in the UK, adding that the route of offering existing customers a second or third product was a lot cheaper than trying to acquire new borrowers.
“Those customers are likely to close loans and are easier; you’ve already underwritten them, so you know they are good from a credit standpoint,” he said.
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“…Those are the ones you really want to focus on.”
Earlier in the interview, B&C enquired about the key challenges that Toorak had seen in the bridging market in 2020 and how the correspondent lending platform had helped mitigate them, in addition to what hurdles it predicted the industry to face this year.
Tim Marsh, director and head of business development and loan acquisitions in the UK at Toorak, said it had seen transactional timelines extended by a “huge amount” during the pandemic and, coming out of the crisis, valuers and solicitors furloughing staff or making redundancies means that they are running at reduced capacity and their ability to fulfil the industry needs is stretched.
“I think there is some nervousness about scaling back up from a staff perspective, because not everyone is sure what the removal of the government’s fiscal support is going to look like [this] year.”
John thinks that the crisis has made a lot of lenders question how they are funded; how stable their capital, and the backers behind that, are; and how funders have acted during the course of the outbreak.
Fundamentally, have bridging lenders’ funders been there in both the good and bad times?
“I think a lot of people have realised — and, frankly, it’s been very beneficial to us — that having a diverse set of partners that have capital to be able to survive a variety of different crises, is really helpful and valuable, and that’s caused a lot of people in the industry to question what they were doing in the past.”
The full interview — which discussed whether there would be an increase in institutional funding and a reduction in private and HNW backing in the UK bridging market going forward; and what consolidation could look like this year — can be watched in full, below.
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