I began my bridging career in 1996, some 16 years ago, after falling into the industry following a profession as a solicitor for some years. Whilst my legal past was not mortgage focused, it appeared to fit naturally with being a bridging lender. Today, solicitors play an important role in the industry, with numerous lenders run by legal or accountancy professionals, many of whom set the foundations of the short term lending market as we now know it.
The ‘challenges’, as opposed to ‘difficulties’, I commonly encounter are undoubtedly the bespoke nature of bridging and the added pressure of doing things quickly. There is more to this kind of finance than dotting I’s and crossing T’s – you need to understand the loan, and this includes understanding the person you are lending to. A bridging lender needs to avoid a tick-box conveyor belt way of dealing with cases because bridging is not just a numbers game. It is real life, real people and real money.
I have seen huge changes in the industry and the landscape of bridging is continuing to evolve. The most notable differences now to when I first began my career have to be with regard to interest rates and, of course, regulation. Once upon a time, two per cent or more was a common monthly interest rate and as a result bridging was not always highly regarded by the mainstream. However, increased competition between lenders (although the jury’s out as to whether much of this is just ‘perceived’ competition), has had a positive effect in driving rates down.
Post 2007, I believe the market took a turn for the better. In response to the ‘credit crunch’, underwriting criteria tightened up lending practices which has led to a more resilient market that can provide liquidity, fulfilling a valuable niche role.
In addition, the quality of the borrower has contributed to a much more stable market, with the calibre of client now tending to be more financially sound than ever before. An overall maturing of the market has enabled certain lenders to stabilise their loan books and to become key authorities within the market. This has given rise to industry trade bodies, such as the Association of Short Term Lenders (astl), that help to both change the perception and raise the profile of bridging finance within the mainstream.
An area which appears to have been addressed over recent years concerns up-front fees which, from my perspective, seems to have been largely eradicated, or at least contained to the margins.
I’m loathe to make predictions about the future of bridging, but I can definitely say that there will be a continuing healthy demand for this kind of finance as it now has a sufficient profile within the wider financial market. Lenders who are competitively funded and those who have mid to long term funding lines and business plans will oversee a thriving market. Quality lenders will continue to ask questions of their borrowers and concentrate on their own lending proposition.
By the same token, those new lenders taking advantage of a boom time with a relatively high cost of funding risk leaving the market just as quickly as they entered; pressure to lend is an unstable foundation for a lender.
An area that may evolve in the coming years affecting the bridging industry is likely to concern the role of technology. Technology may or may not prove essential for bridging but new tools will undoubtedly aid the processing of loans. Right now, you can often begin background searches simply by using Google and, in particular, Google Maps and Street View which enables one to quickly check out a property and surrounding area. I don’t know where technology will take us next but it is sure to play a significant role. Having said this, such tools will never have the scope to replace the role of people, especially in a market where relationships are the key to success. Bridging is essentially ‘old fashioned’ lending at its core.
Moving forward, my challenge is to build the presence of United Trust Bank further and offer the very best service to our intermediaries and borrowers. I have only been in this role for two years, joining in March 2010. However in such a short time we have achieved some great things and have received great recognition (UTB won the Business MoneyFacts Service Excellence Award this year), but, as always, it is very much a work in progress.