I’ve been a BDM in the bridging market for around 15 years now, and without wanting to blow my own horn too much, I’ve written an awful lot of business in that time. So I like to think I have a good feel for the market.
And it’s clear to me that while the bridging market is as competitive as it’s ever been, trust continues to be the big driver for brokers when choosing which lenders to place a case with.
Competition is fierce
There was a time when the bridging market was a bit of a jungle. We didn’t have huge numbers of lenders active, and those that were could charge rates of 20% plus. Thankfully over the years that has changed, and the industry has become much more professional and reputable.
In fact, the industry has performed so well that there have been an awful lot of new entrants into the bridging market, each looking to compete for a slice of the bridging pie by trying to find new ways to design and price loans.
Brokers and their clients have been the obvious beneficiaries here, with a level of choice that would have been simply unimaginable just a few years ago.
There’s no shortage of liquidity within the industry, with plenty of lenders sitting on cash that they are very keen to lend out to the right clients. As a result, so long as the deal makes sense, brokers generally won’t struggle to find a lender keen to take the case on.
This has only been exacerbated by the fact that the market has slowed down a little over the summer, due to a combination of the typical seasonality of the market and the end of the stamp duty holiday.
The fact that there has been less business available has only made lender competition keener, increasing the amount of price matching going on.
Brokers and their clients have honestly never had it this good.
Growing confidence
What’s certainly been evident over the last few months, from borrowers looking for both bridging and development loans, has been a renewed sense of confidence.
There were plenty of investors who had spotted opportunities and projects which they believed in, but they understandably put the brakes on as a result of the pandemic.
They might have believed that a refurb or a new development would usually deliver capital appreciation of say 5-10% in normal times, but these were far from normal times and so they held off.
That has shifted somewhat though, with a renewed sense of confidence about the property market meaning they are proceeding with those projects.
I’ve already started seeing a noticeable upturn in business over the last few weeks too as the summer has drawn to a close, suggesting that the levels of activity seen in the bridging market are likely to kick up a notch in the months ahead.
Who do you trust?
Brokers in the bridging market will no doubt be hearing from lenders on a weekly basis, trumpeting new low rates or revised criteria in that ongoing battle for business, but one thing that has always been clear to me during my career has been the importance of trust.
Brokers want to do the best for their client, and that means far more than simply pointing to a low rate, particularly when the deal on offer comes from a lender with little to no track record.
Property investors view their brokers as trusted allies, who can not only find the finance needed at a competitive price, but also ensure that the funding is delivered swiftly and without any hiccups.
That’s why brokers want to work with lenders who they can rely on, who they can trust to live up to their word and deliver. That trust doesn’t come overnight ‒ it’s something built up over years, from completing a host of successful cases with an individual broker, and it takes a lot of work to ensure a strong relationship between the broker and the lender.
I’ve seen a lot of people come and go in this industry, and seen all sorts of ups and downs for the property market.
It’s why I’m confident that the prospects for bridging are good, and not just in the short-term, but also certain that it’s the lenders who put value on building real, long-standing relationships with advisers who will continue to stand out, even in the incredibly competitive market we have today.
