Market Outlook from Commercial First

Market Outlook from Commercial First


By Stephen Johnson, Sales and Marketing Director
Commercial First Mortgages 

It is an understatement to say that we have all felt the effects of the crisis in the financial markets. From a Commercial First perspective it seems incredible that given the hugely successful and highly profitable business we have built with our intermediary partners that we find ourselves unable to access the credit markets. Unfortunately we are collective victims of events outside anyone’s control. It is important to recognise however that opportunity still exists for intermediaries albeit on a restricted scale, and although the next 12 months will be tough - the market will recover.

The intermediary commercial mortgage market is here to stay. I firmly believe that this statement is fundamentally correct due to several key factors. This market has progressed significantly over the last four years and the intermediary distribution channel is now seen as a key strategic area for any lender - institutional or specialist. Over the past 6 years we have been fortunate to develop and learn from many close intermediary relationships, and the structure of the industry in general has changed for the better. We have seen more diverse, flexible products become available, service has been radically improved both from a lender-broker perspective and a broker-client perspective, and we have also seen a genuine focus on innovation throughout. Such developments were born out of the need to act in the best interests of the client, as well as a result of the various competitive forces that have been positive for the industry as a whole.

Unlike our residential counterparts, the commercial market has been somewhat insulated from the liquidity crisis due in part to the volume of institutional lenders operating in this space. We can gain encouragement from this in spite of the fact that commercial property values are down 10% this year. Yes - we are experiencing difficulties, and one cannot dispute that the UK mortgage market has and will continue to shrink in 2008. We are unable to accurately predict when things will improve but what we can be certain of is that this, like most things financial, is cyclical and the sun will eventually re-emerge.
It is now time to draw a deep collective breath and ensure we are all best prepared for the likely trading environment of the next 12 months. This will require costs to be minimised and revenue maximised through as diverse a range of product sales as possible.

In recognition of this, until such time as we can resume our own lending, we plan to continue to offer the marketing consultancy service to our intermediary partners. A small investment during these difficult times can not only yield short term benefits, but will stand brokers in good stead when the market inevitably recovers. The investment you make does not have to be financial; it can simply be a question of devoting a little time to the process. Having produced over 3000 campaigns for intermediaries over the past 4 years, our teams are highly experienced and able to offer more generic marketing to generate business in any area appropriate for an intermediary’s business. The service can include a face to face or telephone consultation, strategy design, creative work and reporting advice – all free of charge.

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