Brokers diversifying into specialist lending ‘double-edged sword’ – Hollands

Speaking to Specialist Lending Solutions, head of specialist finance at OSB Group Emily Hollands (pictured), explained: “From a broker perspective. I think those kinds of brokers that diversified during the financial crisis are the ones that are really capable of diversifying their business. They’ll be the ones that look to enter into different markets to help more of their clients.

“But it’s a double-edged sword, isn’t it? We’ll happily help all brokers, regardless of what level of specialist business they do, but then sometimes the question should be actually is it better for them to use one of the distributors because they have more experience.”

She said whichever path the broker chose, it was imperative that it was in the customer’s best interest.

Hollands said OSB Group worked “really closely” with key distributors not just due to the value of business they provided but as the company culture matched theirs.

She added: “It’s not a transactional relationship. It’s not about how much business you do. We are looking for quality business and we are looking to work with companies who want that relationship and reflect a culture like ours.”

Conveyancing in bridging and commercial ‘really lengthy’

Hollands said conveyancing had been a challenge in specialist lending as it was “really lengthy”, especially in areas like bridging and commercial.

“We work with some fantastic solicitors across bridging and commercial proposition, but I feel like they’re few and far between and the conveyancing process just feels really lengthy,”she said.

She added that the length of the process could be a “barrier to business” as customers wanted the “right solution at the right time”.

Hollands noted that there were similar issues with standard residential and buy-to-let processes but that for specialist lending, especially for a commercial loan, there was a lot more “due diligence” that needed to be done.

She said technology would improve the conveyancing process, adding that specialist lending was a “little delayed” due to complexity of deals. However, she said it was a “great opportunity for the sector to develop”.

Hollands said the start to finish process could be improved with automated valuation models, open banking and digital identification.

Mortgage market’s resilience during pandemic

Hollands said, notwithstanding the devastation of the pandemic, the mortgage industry as a whole, including specialist finance, has “proven once again how resilient we are”.

“We’ve come out of the pandemic and the demand for everything finance and mortgage-wise is as strong as it ever was.”

She added that OSB Group had seen demand rise for bridging, commercial and specialist finance.

“That hasn’t changed and it’s ever increasing,” she said.

Hollands added that a key opportunity for the specialist lending sector was funding the repurposing of the high street, noting that experienced landlords were looking to diversify their portfolios and examining commercial property opportunities.

“There’s just so much opportunity in the market at the moment and it’s a really good place to be,” she said.

Pandemic has ‘woken lenders up’

Hollands said the pandemic “might have woken lenders up a little bit” as they had to be more fluid and increasingly keep ahead of change.

“The pandemic is a difficult one. It was unprecedented. You cannot criticise any lender for how they behaved during the pandemic because nobody knew any different, this wasn’t another financial crisis. This was a completely different situation than we’ve never had before,” she said.

She added that the key learnings for lenders was that they had to be able to make decisions quicker, understand markets better and make appropriate changes, “both positive and otherwise”.

She said she didn’t think there would be any “long-term ramifications” from Covid on the specialist lending market due to its resilience and adaptability.

Hollands said over the past few years, larger high street lenders had taken a “slightly more specialist view”, citing examples like limited company lending.

“I don’t see the high street lenders becoming more specialist. I think there is going to always be a place for those challenger banks and new lenders to enter the market and that’s a good thing because it drives the competition, and it keeps us on our toes and makes us think about other innovative ways we can help customers,” she said.

‘We can see more people and build stronger relationships’

OSB Group recently hired three specialist managers, Ross Williams, Mo Parmar and Kevin Beale, which brought its specialist finance team to seven.

Williams focuses on the South West and has bridging and commercial experience, and Parmar’s remit is London. Beale’s area is the Midlands.

Hollands said: “We absolutely have the capacity to grow even more, but although it is quite a big jump from four to seven the team are up to speed and already making a positive impact.”

She added that the integration of the Kent Reliance for Intermediaries and Precise Mortgages sales team had gone well.

She noted that it was “already a proven concept” as her team had been dual branded for the last 18 months with Interbay and Precise Mortgages. However, she said that the brands were still separate and has their own unique selling points.

“We can impact so many more brokers, we’ve got a big sales team doing both. It just means that we can see more people and build stronger relationships.”