The lender stated that further base rate increases, falling house prices and lower levels of mortgage approvals caused a £4.5m shortfall against budget in the company’s profit before tax in this period. 

In addition, performance fees earned from third-party funds were below expectations, reflecting the fact that lending margins have been squeezed by rising interest rates and that development projects are being impacted by rising costs, therefore taking longer to complete.

The trading update also highlighted a shortfall in the volume of loan originations and the LendInvest Mortgages division.

This is partly due the macroeconomic backdrop as well as the limited capacity for lending in existing managed funds, and the operationalisation of the new forward flow facility for BTL lending taking longer than anticipated respectively. 

Administrative expenses were also slightly higher due to the timing of certain one-off items, while impairment costs were in line with expectations.

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In response, the business will continue to reduce its balance sheet exposures as part of its strategy to increase the proportion of the company's Platform AuM that is managed for third parties.

Management at LendInvest — while disappointed — is confident that the business fundamentals remain strong, despite expecting the full year profit before tax for financial year 2024 to be below market expectations. 

On the bright side, the report notes that completions in respect of its flow bridging product remains strong and LendInvest’s recent launch into the large specialist residential segment is building good momentum. 

The lender’s prospects in the BTL market are also robust following its new forward-flow funding arrangement, and it continues to develop its proprietary technology. 

Strategies to materially reduce the cost base are also being implemented, and the benefit of this is expected to be realised in the second half of this financial year.

The board is confident that the proactive strategies noted above will improve performance in the coming months.