Bridging lenders still pulling deals at eleventh hour is unacceptable, says broker



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Last week, Bridging & Commercial partnered with specialist lender West One to produce its latest virtual roundtable, this time on the topic of lender reliability.

West One’s head of sales for bridging and development finance, Michael Grant, and BDM, Matthew Watson, joined host and Medianett managing director, Caron Schreuder, to discuss what constitutes a reliable lender and how identifying this early on can make for a much smoother outcome for all concerned.

It also included a panel of specialist brokers: Laura Toke, associate for short-term finance at SPF Private Clients; Chris Borwick, director at Capital B Property Finance; Alex Kyriacou, managing director at Funding Advisory; and Craig Hardiman-Scott, associate at Sirius Property Finance. 

Reflecting on lender behaviour since March 2020, Alex and Chris believe that they have felt supported . 

Acknowledging the obvious adjustment to a new lending environment and associated tightening of criteria,  Chris highlighted that lenders had, in the main, honoured offers made pre-pandemic . Aside from “a bit of panic from institutional lenders ” — which he does not consider to be the fault of the lenders  — Chris thinks that lenders have fared well. 

Craig  and Laura, however, viewed lender performance as more of “a mixed bag”. 

“It [showed] the lenders that had adequate risk policy in place that weren’t over-lending in the good times,” she stated.   

When asked about how West One viewed its responsibility to continue lending in 2020, Michael confirmed that the lender saw the period as an opportunity to work on its relationships — both existing and new. 

“Obviously, risk appetite may have changed slightly, but we were there, and we’ve come through that,” he said. 

Matthew pointed out that, for those providers that managed to maintain lending, changes had to manifest in how they worked with third parties. 

“A lot of lenders  made changes to policies to allow business to still be done,” he commented, adding that accepting AVMs and allowing solicitors to witness document signing remotely were two examples of measures that West One brought in.  

The brokers on the panel largely agreed that while there was a level of empathy for lenders that had their funding restricted in the early months of the pandemic, it is now expected that they should be “up to speed”, considering it’s been almost a year since the first lockdown.  

“[Now], if they’re agreeing [deals] upfront but pulling them at the 11th hour, I don’t think that’s acceptable,” Laura stipulated.   

Although cases are being subjected to more scrutiny from lenders, Chris and Alex revealed that, currently, very few transactions are being pulled at the last minute.  

During the conversation, it became evident that a sound understanding of lenders’ funding models is a prerequisite for brokers operating in today’s market. Over the past 11 months, much of the disruption to lenders’ ability to facilitate deals has resulted from a funding aspect, rather than their unwillingness to do so.  

“It is our job when we’re putting [clients to] a lender to understand how [their] funding works,” said Craig. “…Are you putting the right deal to the right lender?” 

He detailed that specific funding models will better suit certain transactions.  

Craig stressed the importance of ascertaining, should the deal go over term, whether the chosen lender is one that will help to smooth the process of getting the client into a new facility, or agree an extension. 

Touching on what is required from brokers when packaging a deal, Matthew  emphasised the need for transparency around potential issues, complexities or quirks that may influence which funding pot West One can draw from.

“[As] we’ve got multiple funding lines to support us, those things are not necessarily going to create a problem,” he explained, “[but] it may just change how we need to fund that particular deal .”

Alex detailed that, for him, a well-capitalised lender with multiple funding lines could enable greater flexibility when adapting to emerging aspects.  

Laura shared that, traditionally, deposit-backed lenders tended to provide “greater assurance that they have access to the capital”. 

She added that lenders that are not open about their appetite or make a habit of requesting additional proof of exit just before completion, are not likely to garner her support  going forward.  

“The most important thing in bridging is reliability,” she noted. “Yes, the rate is important, but if the lender can’t deliver, then [that] doesn’t really matter.” 

The full video can be watched below.

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