AOBP Lender Bulletin: How can we improve the bridging industry?
I think it is fair to say that everyone involved in bridging finance would view the progress of the industry over the last 24 months with some satisfaction and pride.
We have seen loan volumes double over this period, interest rates converging closer to mainstream rates and an ongoing professionalisation of the offering and practices across the industry.
However, instead of resting on our laurels, I believe that it is essential that we all continue to analyse the industry, to agree what could be improved and to execute these changes as rapidly as possible.
Some of these changes should improve the perception of the bridging industry. Other changes may reduce the likelihood of regulatory intervention, which - without ongoing change and removal of some of the sharp practices we have all heard of - looks increasingly likely.
So, here are a few of the areas that I believe that all bridging industry participants should be aware of and continually work to improve:
1. Efficient conveyancing
Borrowers are all too often let down by the lawyers they choose to assist them, as they do not always act with the speed that bridging finance typically requires. An ideal solution could be that the key industry associations (AOBP, NACFB, ASTL) agree and publish a list of vetted law firms which lenders / introducers can point borrowers towards.
I believe that the procuration fees paid by lenders to introducers should be fully and clearly disclosed to borrowers. This is already the case in the regulated mortgage industry and is a practice that should be universally adopted. The lack of this information provides a borrower with an incomplete picture regarding whether his introducer is truly competitive and acting purely in the borrower’s best interest. Where this doubt exists, borrowers will never truly trust the introducer or the lender, which clearly does not help promote growth of our industry.
2. The best deal for the borrower
The objective for all should be to ensure that borrowers get the best possible bridging finance for the situation in question. I believe that this can only be achieved if introducers approach multiple lenders to request their best possible terms. It is not clear to me that the borrower gets the best offer where an introducer simply obtains one loan proposal (from the lender who pays him the best proc fee perhaps - call me cynical). Some introducers in the market are satisfied with simply getting one loan quote and presenting this as the “best”. Given that Funding 365’s interest rates are cheaper than almost all of the non-bank bridging companies, unless you ask for a quote from us (amongst other quotes) – you truly don’t know if you have the best proposal or not.
If we all pull towards achieving the above, the result will be better execution of bridging loans, lower levels of regulatory concern and most importantly, the best overall deal for borrowers. This fact pattern should ensure that the bridging finance industry continues to thrive and expand.
Director, Funding 365 Limited