There are over 80 short-term financial lenders in the UK. Many of them offer the same type of bridging loans at the same interest rates. The website mortgagesolutions.co.uk asked several bridging finance experts about whether this number of lenders competing for business is sustainable.
The consensus of the experts is that if rates remain low lenders will earn less and those that are not efficient may leave the bridging finance market. The secret to survival could be for lenders to increasingly specialise. For example, some lenders specialise in providing funds to complete purchases of properties sold at auction. Other lenders provide a speedy service that helps borrowers finance time-sensitive deals. Some lenders, instead of offering standard products, have a bespoke service where lending deals are tailored to individual borrowers.
Many lenders are adopting technology that can make the loan application process more efficient. Software and apps can monitor the progress of a loan application and highlight and areas where there is a delay.
Lenders who are likely to survive are ones that play to their strengths rather than try to serve every borrower and every type of loan. Brokers questioned by Mortgage Solutions stressed that excellent service by lenders could also be a key factor for survival.
Increased competition is good for the borrower because a bridging broker has access to a wide range of lenders and products. The skill of the broker is matching borrowers to the best loan deal to suit their particular financial needs.