Certainty is king in today’s fast-moving market

But there are also clear indications that the property market and the needs of borrowers, are going to be different as we recover from the impact of Covid and adapt to the changes the pandemic has brought.

This also means that lenders will need to adapt to the changing conditions, be more flexible around the types of funding they offer and the way those loans are structured. In short, lenders need to put the customer first, which may be a struggle for some more established players.

It seems that the mainstream providers are continuing with their rigid approach to lending and subsequently are not driving the volumes in property finance we’ve seen previously, at least not outside of the big-ticket commercial loans they are most comfortable with.

Instead, we are continuing to see challenger banks and alternative lenders growing their presence and their share of the market, particularly when it comes to more specialist finance needs. This is also why we are seeing a growing demand for bridging.

For example, we’ve just agreed a multi-million pound ‘loan on loan’ partnership with Reflex Bridging, a bridging lender set up by property developer Galliard Homes. We’ve already provided over £10m in funding for a wide range of projects, giving you a sense of the growth in bridging finance.

Traditionally bridging was a niche product, offering short-term finance for a borrower that wanted to move quickly on a purchase and who usually already had a set timescale in mind for when they wanted to dispose of the property or look to re-finance it.

Now, while the speed of bridging is still an important factor to borrowers, many clients also want flexibility around their funding in case their circumstances change. That’s why we are seeing more clients interested in bridge-to-term, where they get the certainty of the initial bridging loan, along with the possibility of converting it into a more standard term loan if their situation changes: if they choose to keep the property rather than sell it, for example.

However, there is a note of caution around the increase in demand for bridging loans. As advisers with any real experience in the market will tell you, there is often a disconnect between what a lender says it will do and what it delivers when it comes to securing funding.

Competition on pricing and LTVs is heating up, and we’ve all heard of lenders stating they can issue terms within 20 minutes, one hour, or 48 hours. But, when faced with a case which may not be ‘vanilla’, do they really meet those promised timescales? What I hear from fed-up clients and brokers is that they invariably don’t. This isn’t good for the borrower or adviser, the market in general, and certainly not for the lender’s reputation.

What bridging lenders need to offer is certainty. At Recognise Bank, we have a robust process where every case is reviewed and responded to within 48 hours. Our model is based on one-to-one relationships with the adviser, where a highly experienced team will discuss everything to do with the case, including valuations and legals.

But, because the market is continuing to change and expectations from brokers and clients are getting higher, we’re not resting on our laurels and are currently developing a series of service enhancements to be rolled out over the coming months, such as improvements in the valuation process.

Bridging is all too often seen as just being about speed, but ultimately it is about trust and confidence that a lender can provide the service and the funding the customer needs. As the market becomes even more competitive over the coming months, it will be the lenders that deliver on their promises who are successful and drive the sector forward.