The stability of the sector is forever being questioned but most surveys don’t tell us much and the overall signs are positive
It was good to see the return of the ex-Dragonfly team with their new lender, Octane Capital.
It represents a confidence in the stability of the bridging market that is forever being questioned. New lenders are a primary marker of an industry on the rise, not a sign of a sector on the wane.
I also look forward to the day when we can welcome back the team behind Fortwell Capital. I am sure Colin Sanders and his people will be back soon with a different lending vehicle. Their departure has nothing to do with the market having reached capacity.
It takes only the end of a lender such as Fortwell as an intermediary-focused business, or a seemingly poor set of figures from the many surveys on offer, for the vultures to start suggesting the market has peaked and is on an inevitable slide.
Depending on which survey you look at on any particular day, the market is going up, going down, stagnating or pausing for breath. I have stopped looking at them because the industry still lacks a central point to which all lenders can provide their figures.
Most of the surveys are based on a small number of lenders or distributors that are prepared to share their data. A proper pooling of data from the whole market would provide a proper foundation. However, until we get an agreement between trade bodies and lenders to share their members’ data, competing surveys will continue to be a snapshot at best, and not representative of the industry’s output.
Perhaps I am getting too old to be seduced by the ‘exclusive rate/best product in the market’ stories that tend to pepper the trade media. Many of these come around with the same persistency as the apparently never-ending DFS sale adverts. With a jaw dropping rate, the new product is pushed to the front of the shop display and does what it is designed to: attract broker attention.
The problem is that the criteria are usually such that few, if any, applications actually make it to the finishing line. Curiously, there is always another product with a higher rate available, usually when the broker and client have no time left to go to another lender.
On the subject of transparency, bridging remains a minefield for brokers trying to compare products on a like-for-like basis. In the first charge market, sourcing systems do a good job of giving brokers and clients a true cost breakdown by including ancillary fees and other costs. But sourcing for bridging products is still in its infancy.
The best way for advisers to compare products is to employ a specialist to ensure they have made a wide enough sweep of lenders and have taken overall costs into account. After all, the cheapest rates do not necessarily mean the cheapest cost.
In a previous article, I said that some building societies would be making their debut in the bridging market. One or two have broken cover and said they will but it is still not certain when we will see their emergence.
It does confirm again, though, that the bridging market is in good shape. When established lenders from other sectors start to take an interest, we know we have a confident and stable industry. Extra competition from lenders such as building societies can be only good for borrowers, as well as add a greater legitimacy to the sector.
Despite what I said about being wary of headline rates, there has been generally positive pressure this year. It is good to see Masthaven Bank’s 40 per cent LTV product from 0.49 per cent, for example. Clearly this is aimed at a niche market of low-LTV clients but it is indicative not only of Masthaven’s ambitions but also of the direction of travel for rates in a competitive marketplace.
Phil Jay is director at Complete FS