This has been a testing year for the property market. Mainstream lenders have tightened their criteria, specialist lenders are even more selective in their deals, and others are simply unable to take on new clients on a temporary or even a permanent basis.
Despite the drawbacks the property market pushes through to adapt and moves forward to the ‘new normal’.
Especially with the stamp duty holiday, which runs until the end of March 2021, the UK property market is currently experiencing a surge in transactions and significant house price growth. However, many prospective buyers are struggling to secure mortgages or loans from lenders in this uncertain climate.
Virtual house viewings and online auctions allow potential buyers to continue with property views. Many companies – including MFS – are prepared and ready to work from home, should another lockdown occur.
MFS has seen a sharp increase in demand for our bridging loans, driven by both the stamp duty holiday and the significant delays many brokers and borrowers have encountered from other lenders during the pandemic.
Covid recovery fund
The hurdles that Covid-19 has brought to the specialist finance world have been challenging for us all. We have been lucky enough to be able to continuously lend to clients throughout the year, and we set up a Covid-19 recovery fund to supply those in need of fast bridging loans due to pandemic-related delays.
This specific fund is different from any others; it was and is set aside for those who were left in limbo and for the quirkier deals left on the side. Bridging is meant to be fast but the average time to lend has gone up to 52 days, according to Bridging Trends data. Naturally, time-sensitive deals are at a high risk of being gazumped.
Opportunities delayed are opportunities lost, so it is paramount that brokers have the confidence to know that the deal will happen from the start.
Of course, our main principle is to lend responsibly for all parties involved and if the loan is not feasible then the broker will be informed from the onset so that they can find a suitable lender in time.
Now more than ever, lenders need to band together to support the specialist lending industry, to bolster the industry’s reputation and credibility. We have had many brokers requiring our assistance as their deals were withdrawn close to drawdown. This left them and their clients in dire situations.
There are still many struggles facing borrowers. Increased delay times from banks have pushed homeowners to their limits. A recent MFS survey found that, despite the rising interest in the property market, 52 per cent of homebuyers were unsure whether they’d receive a mortgage. The implication of risk has forced many lenders to reduce their LTV levels, creating a dilemma for potential buyers; in particular, first-time buyers.
Buyers are in search of fast finance to help provide certainty for future investments. This is achieved through the speed of receiving valuation reports, getting the right paperwork and working closely with solicitors to get it all done in a timely manner. We pride ourselves on speed, with an average completion of 10 days and as little as three. We manage this by supplying our own in-house funds, alongside our range of funding lines, and providing a dedicated underwriter for each case to conduct the process immediately. This ensures the property investment can be secured and the client’s deal completed.
The property market is resilient and, with the oncoming of Brexit and its potential wealth creation, there is a positive outlook for specialist lenders with the flexibility and agility to deal with difficult circumstances in a way that truly caters for the real world we live in.
