Pressured lenders must resist temptation to increase risk – Hersch

ASTL membership has grown significantly over our first decade – we had 19 founder members in 2008 and this has grown to 65 members and associate members in 2018.

We saw several new entrants join the sector in 2018, with varying levels of experience in short-term property lending, so it will be interesting to see how these challengers fare in the next 12 months.

The volume and value of the short-term lending market continued to rise in 2018.

Completions by ASTL members were close to £4bn for the year ended 30 September 2018, a rise of 21.2% on the figures for the year ended 30 September 2017.

During the same period, loan books have increased by 16.6% and applications by 8.9%.

Promote understanding of issues

The ASTL has been working with various organisations during 2018. These include the Financial Intermediary and Broker Association (FIBA), with whom we aim to foster greater broker-lender understanding.

We’ve also participated in discussions with the National Association of Commercial Finance Brokers and Financial Conduct Authority, as well as responding to various FCA proposals.

We’ve also held a series of seminars on fraud and other issues such as development funding.

At the ASTL, we’re excited about what 2019 holds.

We plan to provide practical education for staff with less experience, as well as seminars to promote understanding of various issues.

Resist temptation to increase risk

The economic climate is expected to be more difficult in 2019, with exit and refinance becoming tougher as traditional lenders are even more cautious.

It’s difficult to see how all short-term lenders will flourish – mergers and acquisitions are likely.

It will be interesting to see if peer-to-peer lenders struggle in 2019. If so, regulatory bodies are expected to react.

On the whole, short-term property lending will continue to grow as firms take the opportunities presented by the continuing lack of so-called mainstream finance.

There will be pressure on rates and loan-to-values, but experienced and well-run firms should resist the temptation to increase risk levels.

Despite the pitfalls for the unwary, the outlook for the short-term lending sector remains reasonable.