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Most regulated networks prefer partnerships with these specialists who take responsibility for the advice and packaging of cases, while sharing the income generated. This is a better result for all involved in the transaction.” In fact, the latest lending survey from the ASTL showed that bridging lenders increased their lending by nearly 15% in 2018 compared with 2017, highlighting a healthy and growing demand for bridging finance. “Processes may have sped up, but a mortgage still takes longer than bridging and, in any case, speed is usually not the main factor in choosing a bridging loan,” argues Benson Hersch, CEO at the ASTL. “Bridging by its very nature is an interim solution, often the property or the customer’s business are not yet ready for long-term lending criteria.” Adam Tyler, chairman at the Financial Intermediary & Broker Association, believes there is a difference between the need for a mortgage on a property and the reason why a bridging loan is the best option. “While there will be a need for quick finance to secure the property, this is a small percentage in comparison to the real demand for a bridging loan, whether it is for development, refurbishment, development exit, auction purchase [or] any other number of reasons that fast, short-term finance is needed.” However, Adam explains that if the legal process takes as long for a bridging loan than it does for a mortgage, as long as the property is mortgageable he can see how this would affect the figures. A lack of distribution from networks could be due to a number of reasons, where I found that one network’s ARs could do bridging, but it wasn’t something that was ‘promoted’. Benson tells me that some ARs are “woefully ignorant” of
the uses of bridging, and knowledge of how to go about getting a bridging loan and what the costs are is not widespread. A recent poll by Bridging & Commercial found that 92% of industry professional respondents did not think that mortgage networks sufficiently educated their ARs on bridging finance. But why would a network not actively educate their members on this product? It could be down to regulatory complexity. Gemma Harle, managing director at Intrinsic’s mortgage network, says that it is “challenging” for most mortgage advisers to stay up to date and competent and, for this reason, it refers to specialists when it comes to bridging. Is the majority of AR business going through Specialists? Specialists can include master brokers, packagers and distributers—a powerful channel which both historically and continually supports the bridging market. Keeping up to date with the criteria of a growing number of providers can be a chore—and completely off-putting to those who are not experts in the field. Steph Charman, specialist relationship manager at major network Sesame Bankhall Group, says that mortgage networks will have master brokers or specialist distributors within their proposition, where advisers can refer their bridging enquiries. This means that the amount of business originated through networks could be much higher. “Although only a small percentage would have been written directly by network members, a large percentage of bridging finance completions via the master broker sector would have initially started as a network member enquiry and referral,” Steph claims. Understanding the true volume of 22
Bridging & Commercial
A large percentage of bridging finance completions via the master broker sector would have initially started as a network member enquiry and referral
business originated through networks could therefore be difficult as the client may be advised by the AR or through a packager, begging the question: is this network or packager business? It transpires that not all bridging lenders have the systems to recognise the network in the process and transaction. With advisers already busy looking after their existing customer base, when a potentially ‘out-of-thenorm’ case appears, referring the case to a business which is an expert in that area is said to be a common solution. “What would be interesting to see would be whether master brokers have seen an increase in the bridging referrals received from mortgage networks,” Steph says. “One bridging partner Sesame works with has seen a 40% increase from 2017 to 2018 in the number of bridging enquiries being referred to them by our members.” The true measure Specialist packagers Crystal Specialist Finance, Clever Lending, Impact Specialist Finance and TFC Homeloans saw a year-on-year increase in bridging from ARs last year (with one growing as much as 15%), implying that referrals from ARs to packagers and master brokers may be more popular than going directly to lenders. The proportion of bridging business the packagers I spoke to receive from ARs ranges between 30% and 75%—a notable amount. Clever Lending reveals that previously the bias towards DA was more pronounced, however, it saw a “definite swing” towards ARs last year. This growth could also continue due to the fact that Clever recently secured one of the larger mortgage networks as a partner and is also now offering regulated bridging advice as a service. Paul Day, sales development
