Certainly, the major focus, from the Bank of England for instance, has been on supporting the economy but particularly supporting the larger banks to ensure they keep lending and that they feel able to pass on the same rate cut as the Monetary Policy Committee announced in August.
However, for bridging and development finance lenders, the decision-making and responses to the vote to leave the EU will have been just as relevant for advisers and their clients. And in that respect, we certainly saw an immediate reaction in terms of railing back on lending activity and tightening criteria, but which I’m glad to say appears now – a few months on – to be moving back towards something like the pre-referendum market we were dealing with in the first half of the year.
The latest member survey of the Association of Short-Term Lenders (ASTL) appears to show this burgeoning confidence, albeit one dampened by the uncertainty that accompanies all markets at the moment – we know this is likely to continue until the Government invokes Article 50 to leave the EU, probably at the start of next year.
That said, 30% of ASTL members said they were positive about the long-term future of the economy, compared to just 6% in the week after the EU referendum. This is clearly a move forward and it’s again not so surprising because in those days after the 23rd June who could really say with any conviction just how things might play out. Even those who had fought long and hard for ‘Leave’ had no real idea what would happen in practice, and some might add that they still don’t, although we appear to have a lot more political stability than we had just a few months ago.
Back then, confidence and certainty were in short supply and lenders reacted accordingly. Now, as mentioned, there is a move back to a type of normality but if you’re a broker you’ll be forgiven for wondering just who is doing what, what their criteria is, and whether your case will make the grade. It’s a big reason why we’ve seen a 30-40% increase in broker enquiries since the referendum vote – again brokers are seeing clients and cases which they know should fit but may be unsure of with who and how.
Those with any semblance of understanding in this marketplace know that, in this situation, it’s maybe better to acknowledge that you (and your client) will be far better off if you use a specialist broker/packager who does this day-in/day-out and is completely on top of the lenders and their changing wants and needs rather than attempting to push a case round all and sundry and have it rejected at every single lender who’s willing to look at it.
We’re finding that both existing, but also newer brokers, are coming to us in order to get that certainty and to give their client the best chance of securing the finance they need. Let’s be frank about it, lenders have restricted criteria since the referendum, and deals which may have seemed racing certainties at the start of the year, are now not stacking up for them. Even though there has been a move back to pre-referendum activity, it’s certainly not complete for many lenders, and therefore knowing who to deal with for a certain case can make all the difference.
Also, we should all remember that lenders will be quite aware if a broker attempts to place a case with all competitors, and then as a final resort goes to a specialist to try and get it through. Catching sight of a deal for a second time from a different source is likely to be a nail in the coffin for all concerned – far better to go to the specialist broker first, given they have access to all, and to be placed first-up with the lender most likely to make the deal happen.
It sounds simple, and a common sense approach, but I think we all know that brokers are often loathe to introduce, even if it will be better for all. Perhaps, given the market, it’s time to leave the ego at the door and to work out the best route to the lenders and to delivering the finance for your client. No-one is going to think less of you – certainly not the client.
