Building a ‘super bridging broker’ by bringing in the best – Barrett

Speaking to Specialist Lending Solutions, Lucy Barrett (pictured), managing director of the newly-created Aria Finance, said that the response from the market had been “really positive” regarding the merger between Vantage Finance and Enterprise Finance to create the new broker firm.

“The general feedback has been that it’s nice to see something so positive and exciting in a time where things have been difficult. I’m really pleased with how it’s gone, and I think the fear of losing a brand that I was obviously personally very attached to has been completely eradicated by the feedback that we’ve had,” she added.

Barrett was founder and director of Vantage Finance, which was launched in 2004, and offered buy to let, commercial finance, bridging, first and second charge mortgages and development finance.

Charge of the second charge brigade

She added that while both businesses operated in the same markets, one of Enterprise’s biggest strengths was in the second charge market. Vantage also offered second charges, but it did not “deal with the same volume” and “weren’t as known for it”.

Barrett said that the second charge volumes had really “gone through the roof” and its team had been “incredibly busy”.

She said that it was actively recruiting in second charge and, while there was some volatility that needed to be managed, the demand was expected to grow, making it a key area of growth.

Barrett noted that Vantage was “very entrenched” in the buy-to-let and commercial space, especially high value complex transactions that need “extra depth of relationships”.

She said that both had “huge expertise” in bridging, so combined it was a “super bridging broker”.

Barrett said that it was recruiting across all areas and roles, but the market was “hugely competitive” at the moment.

She added that, in the near future, people would probably be more reluctant to move jobs due to uncertainty, citing the pandemic as an example of when this had happened previously, but that the company was always looking for talented people.

“We will leave the door open for talented individuals. It’s not that we’re going to stop recruiting per se but we’re probably just not going to drive it as heavy in some departments. Although, we are certainly keen to find new blood into our second mortgage division,” she noted.

Taking charge of the pipeline

Barrett said that one of the key challenges looking ahead was staying on top of its pipeline cases in each division to “ensure customers don’t get let down” as the lending environment had become “very turbulent”.

She said that she had a “lot of sympathy with lenders” pointing to challenges around rising cost of funding and time to process applications.

“However, there has to be some sort of understanding between everybody of what the risks are and how they might change their stance on things. It has been a little bit of a moving feast.”

She said that most lenders had conducted themselves well, but it was “never good when deadlines pop up and are unrealistic or completely unachievable”.

“I think for us, it’s about making sure that we’ve taken all the steps to move the pipeline forward proactively, so that we don’t get caught out by any of those last-minute changes.”

Barrett added that managing customer expectations was crucial and that was keeping them busy as the company wanted to make sure it wasn’t “letting anybody down”.

“Whilst a lot of it’s out of our control, anything that is within our control, we’re damn well focused on that. It’s like anything in life, you can only really control what is within your gift to give, and if it’s not, unfortunately it’s the way the market goes.”

She said she hoped that the market would start to settle down, adding that it had “seen potentially some of the worst, but it doesn’t mean it’s going to be easy”

‘I do think that most lenders are trying their best’

Barrett said that there was a lot of frustration from brokers towards lenders, which was understandable but there had to be a “mutual understanding that everyone everyone’s doing the best they can”.

“Lenders aren’t waking up in the morning and thinking let’s take advantage of this market and see how many borrowers we can mess with today. I’d like to think any decisions that are being made are born out of necessity,” she said.

She continued that a key message from lenders was that this was new territory, unlike the financial crisis where it was an issue of liquidity.

Barrett said that the way lenders were coping with recent changes was evolving as they learnt from previous uncertain periods.

She added that while previously lenders may have removed and repriced products several times in a week, now they were removing fixed rates for longer periods of time. This was partially due to instability in swap rates making it harder to price fixed rate deals, but also to protect service levels.

“They don’t want to create a situation where they get tons of applications and get inundated, service gets blown up and then by the time the application reaches the critical point of valuation, mortgage offer, agreement in principle, the rate could have gone up three times before it gets to the point where it’s secured.”

Barrett continued: “I do think that most lenders are trying their best. They’re not necessarily getting its right, but I think most of them are trying their best and hopefully the learning will help us to manage it better.”

Broker value should ‘never be disregarded’

She said the key thing for brokers was “communicating well with clients”, giving background as to what’s happening in the market, what’s going to do to help them and any potential pitfalls.

“You can’t do much more than that because we can only work with what’s in our control.”

She added that she was seeing a lot of brokers who were working across weekends, or late into the evenings, to ensure that their customers secured the best rate.

Barrett continued: “That is what makes brokers so successful and that’s why the value that they add should never be disregarded. Clients need brokers, lenders need brokers. I think for many brokers it’s about knowing their worth and understanding that this period will blow over.

“They’re not going to be working Friday, Saturday, Sunday for the next six months, something will change. But it’s amazing work that they are doing and they should take that time to give themselves a bit of a pat on the back.”

Buy-to-let market will need innovation to keep moving

Barrett said that the buy-to-let market was in a “difficult place” at the moment, pointing to turbulence over the past few weeks where lenders temporarily paused lending, pulled and repriced products following financial market volatility from the mini Budget.

“I think it has been really quite hard to manage, I think it is off-putting for customers because they are not sure whether to fix into these high interest rates if they don’t have to or if things might settle back down.”

She added that there were more and more customers who could not raise the level of debt that they needed to as stress rates rise.

Barrett said that it would be interesting to see how this panned out over the next three to six months as to whether lenders might “come up with new ways to make these applications work” such as greater flexibility on top slicing.

“I think for the market to keep moving we are going to need a little bit of innovation, otherwise it is going to become very difficult.”

However, she said that they were still getting a lot of enquiries and customers wanted to talk to brokers about their options, but she questioned how much of that will come back through to application and completion.

“I think purchase work is probably going to be very slow, certainly in the short term. There has to be a house price correction and it’s not until we start to see those prices come off that I think investment purchases will start to pick back up again.

“If people think they are getting enough value on the capital value of something they would be willing to pay higher interest rates but it’s not really palatable to pay at the top of the market for property prices and that be matched by high interest rates,” she explained.

Barrett added that it would be the “bog standard transactions” that would go down but high value and more complex transactions would “still be there”.

“You’re just going to have to look a bit more versus what you did previously to achieve the same or anywhere near the same sort of completion numbers.”