Despite rumblings of a so-called self-build revolution on the cards and lender interest in the development sector growing, there is little awareness of the products on offer.
One reason for this is that mortgage brokers don’t seem fully engaged with development finance as yet. And who can blame them.
We need only look to the second charge sector to see the difficulties that can arise when it comes to encouraging brokers to embrace a product they know little about and are not fully comfortable selling.
The difference here, however, is that the second charge market had something of a head start.
As those who’ve been around a while will remember, the secured loan market was created in the 1970s and 80s from press advertising, followed in the 90’s by TV adverts which prompted consumer awareness which then created demand.
The development finance market has had no such leg-up. In order to grow, therefore, and reach its potential it now needs to promote itself.
While plenty has been done in terms of educating brokers on the benefits and uses of second charge – and significant progress has been made – less has been said about development finance.
Indeed, unless brokers are actively looking at specialist development finance titles little is said about how the products work and what type of deals are on offer.
Enlist brokers for growth
We’re now seeing more lenders entering the development fold as the self-build and SME developer market continues to grow.
But as with all specialist products, lenders are going to need to enlist mortgage brokers if they want to see significant growth in this area.
Product development and new lenders are just one part of the puzzle.
We need to see all parts of the market become engaged so that consumers can be made aware of what’s out there.
As we’ve heard many times in second charge, education is key and talking to a specialist is the way to find out.