What’s more, this isn’t just a residential recovery; demand for bridging loans from the property investors we have long dealt with is also booming.
There’s no question that the stamp duty holiday has had a big impact, perhaps even bigger than expected.
However, while demand has returned in a significant way, perhaps surpassing even that seen before the nation was locked down, that has not been replicated by lender activity.
It was understandable, inevitable even, that lenders would put the brakes on during lockdown and restrict activity.
We did it at LendInvest by dropping our maximum loan to values (LTVs), for example.
Yet there is no denying the fact that some big names in the bridging market are still operating in a far more limited fashion, if they are even lending at all.
Risk and funding
In some cases this will be down to wariness about the long-term prospects for the market, though this can be countered by a thorough understanding of the case, the borrower and their experience as a landlord too.
All too often though it will be down to funding drying up – lenders who enjoy a sound funding base are better able to continue lending, even in the unprecedented times in which we find ourselves.
Of course, that reduction in choice can present significant difficulties to brokers and their clients who may have found it relatively straightforward to access loans in the past but now face fewer options.
It also means that the lenders who are still active are seeing significant interest in their products.
Increased volumes are obviously great news for lenders who are still active and retain an appetite to lend, but it would be wrong to say that they do not present their own challenges.
Don’t let standards slip
It is all too easy for lenders to allow their usual service standards to slip.
That’s why lenders have to think long term when putting together their service processes, and develop a system that doesn’t just work at the current lending volumes but can also be scaled up.
Smart integration of technology plays a part here of course, but so too does the personal touch, as the sales team can work alongside the underwriters to ensure that the case gets over the line in a timely fashion.
Experienced business development managers and underwriters are also worth their weight in gold in these instances.
Nonetheless, it’s yet another consideration for brokers to bear in mind when advising their clients.
Rate will always be of fundamental importance to property investors looking for bridging loans ‒ it’s their business after all ‒ but we know that there’s far more to being an adviser than simply identifying who has the lowest rate.
Lenders still have plenty of challenges to meet if they are going to thrive in the post-Covid landscape.