Last year saw brokers wake up to the opportunities presented by the commercial mortgage market. While there is still a long way to go, the momentum is there and we have seen increasing interest at the workshops we run for our business introducers and at the last Mortgage Business Expo.
This in turn has led to the launch of specialist commercial brokers, with most of the larger packagers also now having commercial offerings available.
As expected, the quality of these new ventures varies, with some providing excellent service and others a more limited offering. In this market it is essential that before you place business through a commercial broker you know what service you will be getting.
I expect that 2007 will see a continuation of the trend towards more commercial mortgages being placed through brokers. We may see a slowing in the growth of specialist brokers and maybe even some consolidation, with less successful operations closing down.
But it is likely that most residential mortgage brokers will be better off using specialists unless they have the necessary skills and can generate sufficient volumes of business to gain a full understanding of the market.
On the lending front the prime market continues to be dominated by clearing banks, although a number of societies also have good offerings. The main new entrant is Salt Commercial, the commercial lending arm of The Derbyshire. It will be interesting to see whether it is joined by others this year.
We also saw Commercial First moving nearer the prime market with its product launch in the autumn. It remains the main player in the sub-prime market, with lenders such as London Scottish, InterBay and Peninsula taking smaller shares of the market.
In the year to come it seems certain we will see further entrants and this can only be good news for brokers both because of the increased choice away from high street lenders and the fact that many of the new lenders can only be accessed via intermediaries.
It remains to be seen how the offerings from new lenders are pitched – will they go head to head with either banks or Commercial First or will they be seeking niche areas where they can operate profitably on lower volumes?
Whatever happens, there are opportunities and exciting times ahead, although increased competition among lenders and brokers means that the quality of both offerings and expertise will be important.