The bridging lender — which has lent between £250m and £300m over the past eight years — is self-funded, leveraging a network of HNW individuals, family offices, hedge funds and, as required, the wider market.  

When asked whether there’s a concern around the amount of liquidity being injected into the bridging market versus the current volume of business, Anthony feels that while the quantum of money available isn’t necessarily a problem, the stress it puts on lenders to get money out of the door is. 

In his experience, he finds that institutional funders often want to deploy large amounts of funding (typically £100m), in short periods of time, rather than starting with smaller pots of capital and building it up. 

“This can result in pressure being exerted on the lender to compromise their underwriting standards to cover their non-utilisation fees.” 

Anthony thinks that institutional funding is “not very sticky”, pointing to the drying up of funding early on in the pandemic. “The more you were dependent on these lines, the longer it took you to be able to start lending again,” he said.

•   Lenders struggling with deal flow warned of the risks of expanding regionally
•   Whitehall provides £2m bridging loan for Marylebone apartment
•   Whitehall Capital refreshes website

He added that while institutional funding is cheap and available, it’s not flexible. 

Anthony is of the opinion that if a lender is solely reliant on a funding line of this type, it may end up disappointing a lot of its brokers and borrowers as “there’s no certainty of execution”.    

When pressed as to why this might be the case, Anthony explained that, unlike self-funded lenders, providers backed by institutions typically go through the credit process twice.

“[Initially], it’s the lender evaluating the credit application,” he outlined. “Assuming the lender supports the case, it then needs to secure independent approval from its institutional funder. This is not dissimilar to the P2P model.” 

However, he still thinks there is a place for institutional lenders. “We too have an institutional credit line which we will draw upon from time to time, not least as this often delivers cheaper funding,” he added. “That is the trade-off which borrowers working with third party-backed lenders need to face.

“For the borrower, there is a natural dilemma; they find themselves asking which is more valuable: certainty of execution, the ability to speak directly with decision makers, a pragmatic approach to lending and/or the capability and experience to turn things around quickly or, alternatively, a rate that is slightly better, but with no certainty of execution.”