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NEW BRIDGING ENTRANTS COULD BE SLOWING DOWN COMPLETION TIMES

By Kit Thompson

A bridging lender has told B&C that some newer entrants to the sector may require further administrative work than more established specialist lenders.

The news comes after the Association of Short Term Lenders (ASTL) reported that the rate of bridging loan growth over the past year had slowed significantly and suggested that lenders were not completing as many loans.

Mark Posniak, Managing Director of Dragonfly Property Finance, said he had not experienced an increase in the time needed to complete a bridging loan, but had heard that underwriting procedures in the broader industry were nudging higher because of recent market entrants.

“From what I hear, some of the newer entrants to the sector require a lot more paperwork and administration than the dyed-in-the-wool specialist lenders,” said Mark.

“I suspect this is partly a mixture of some lenders’ more mainstream heritage or, perhaps, simply caution as they are still relatively new to the sector.

“The thing is, quicker completion times doesn’t mean cutting corners risk-wise if you’re doing it right and know the sector.”

Mark’s comments were echoed by Bob Sturges, Head of Communications at Omni Capital, who said the bridging market continued to attract new players and borrowers.

“Denied elsewhere, they are turning to the sector for the funding or returns they require,” said Bob.

“But inexperience shows, and I suspect this most obviously reveals itself in turnaround times.”

Kit Thompson, Director of Bridging Finance at Brightstar, said he had noticed an increase in the time it takes to complete a bridging loan, but believes this is a result of greater regulatory requirements.

“For regulated cases, this is no surprise, as lenders have to satisfy Mortgage Credit Directive (MCD) requirements and gather just as much, if not more information and supporting documents, than their regulated counterparts in the mainstream mortgage market,” said Kit.

“This includes income verification, bank statements and the like, and they have to be satisfied with the proposed exit route, which often means the broker or client obtaining a mortgage decision in principle as well, in order to satisfy the bridging lender.”

Stephen Wasserman, Director of West One Loans, added: “More detailed regulation in future may cause longer completion times, but I don’t think it would result in a drop in enquiries as borrowers understand that it is the necessary due diligence causing the extension and not a failing on the lender’s part.

“Bridging lenders are often more flexible and receptive to unusual and complicated cases than their mainstream counterparts and I don’t see enquiries dropping off any time soon.”

Scott Marshall, Operations Director at Roma Finance said lenders need to make sure that they are prepared for any eventualities where a bridging loan could take longer to complete.

“It’s important the lender’s solicitor is pragmatic with their initial enquiries so as not to overburden the borrower’s solicitor, which can cause delays,” said Scott.

“Another critical element is transparency among all stakeholders so that the lender, introducer and client have visibility on where the case is at. This also helps bat away any ‘curve balls’ which may arise.

“Quick and accurate decision making is key to keep the transaction moving forward.”

Amicus saw a surge in activity in 2015, extending its impressive run from the previous year and Managing Director, Keith Aldridge put this down to the lender’s strong working relationship with its brokers and an increase in staff numbers.

“We are currently half-way through a broker survey project that is focusing on a variety of service lead topics including our time to completion performance, and the honest feedback we are receiving from our premier supporters is making our completion process even more robust,” said Keith.

“A successful completion does not just happen – it is the combination of lender, master broker, broker, valuer and solicitor playing a proactive role at the right time and keeping all other parties aware of the situation.”

Mark said despite ASTL’s report of slowing bridging loan growth, people would not be put off by an increase in average completion times because there are still lenders who can complete a deal quickly.

“If you need a loan quickly, you will always find a lender who can arrange it for you, even if you don’t end up using the lender you initially approached,” Mark added.

“I also think that if completion times in the industry have nudged up slightly, it’s unlikely to be a material difference.”