While mostly referring to mainstream lenders this does raise the question of whether it is ever justifiable for lenders to provide bad service. After all, more than anything else lenders are in the service business.
This is even more the case in bridging and short-term lending where there is even less excuse for bad service.
Bridging is all about speed, individual underwriting and personal service, so a delay of any sort here can jeopardise a whole case.
While mainstream lenders have been scrapping over rates for a number of years now, there has been something of a price war taking off in the bridging market since the start of the year.
However, while everyone wants cheaper rates, it is almost irrelevant how low rates go if the service is not there to back it up.
Ultimately, as a lender, if you are not providing the level of service that brokers and borrowers need, then you’re not doing your job.
Jeopardise a purchase
Unfortunately, David’s findings were backed up by the results of a recent survey that we conducted at Hope Capital, where 21% of broker respondents said getting approval from other lenders can cause the most delays in the loan completion process.
The only things to score higher were getting all the information from the client and the role that solicitors play – which can be particularly testing in a bridging case as so many solicitors are unfamiliar with what is required.
But in a profession where 47% of brokers say that speed of service is one of their top three priority areas, to not deliver must lead brokers to question what these lenders are doing in business.
In the bridging industry if a lender takes a long time, or, worse still, says yes only to change their mind further along the line, then it could jeopardise a borrower’s purchase.
This is particularly the case when the purchaser is a developer, in a competitive bidding situation or buying at auction.
Rates vs service
Many service problems seem to occur after a lender reduces their rates, but lenders know when they intend to do this, and they know it is likely to result in an uplift in business, so it is essential that they sort out their staffing in time.
If you can’t cope with the volumes then keep the rates where they are.
Similarly, holiday time occurs at more or less the same time each year, so lenders need to plan ahead so their service is not affected.
Ultimately, if you cannot cope with the volumes then your rates need to rise to be less competitive rather than keep accepting volumes and then not be able to cope with them.
Both lenders and brokers expect speed and service.
In the world of bridging this should mean a loan completion in days not weeks and should include being able to speak directly to an underwriter or a senior decision maker.
Not providing this level of service lets down the very people you are in business to help.