There’s no doubt that the bridging market is in good shape with a variety of lenders and a healthy degree of competition. This, coupled with the exceptionally low Bank of England Base Rate, means that the cost of a short term bridging loan has probably never been lower. With the difference between lender rates often just a fraction of a percentage point, there are more factors at play than simply getting the deal with the lowest price. Getting out and talking to brokers in their offices and at various roadshows, and looking at the responses to our broker surveys, it’s clear that most brokers are considering where to place their cases based on the overall value of what the lender provides rather than just the rate. And it’s a strategy which is helping them to meet or exceed their customers’ expectations and give them more time to manage and grow their businesses.
[color_quote]Few of us look purely for the cheapest option when buying a product or a service. In fact according to one of our recent polls, just 3% of brokers always go for the cheapest when they’re buying goods or services for themselves and I would suspect a similar number of people working for lenders would say likewise. Interestingly, a much higher percentage of brokers, one in five in fact, said that their customers just wanted the cheapest deal when arranging finance. So, are brokers and their customers so very different?[/color_quote]
I don’t think they are. We know that the customer sees the broker as the person they’re buying from, rather than the lender. As such, the broker adds value by assuring the customer that they can leave everything to them and the process will be stress free and take up the minimum amount of their time. For some customers, getting the cheapest deal is a given, because for many, that’s their perception of what brokers do. They find you the cheapest deal. [pull_quote]Actually, it’s not that hard to find the cheapest deal, and if that’s all a customer gets from the broker relationship then they’re probably being sold short.[/pull_quote] A good broker will find their client the best deal for their needs at the most reasonable price. In effect, they will find them the best value deal, and customers need to acknowledge that it’s rarely going to be the cheapest.
So, what are the key factors aside from rates which drive a broker to select one lender over another? Flexibility, knowledgeable staff and great communication are all important. However, considerations which have moved to the fore more recently are the speed of the initial decision and the surety of funds, both in a lender’s willingness to lend and in actually having the funds ready to draw down when required.
The feedback we have had from some brokers is that since the Brexit referendum it has become harder to judge which cases will now be approved and then seen through by certain lenders. They say that from many lenders there’s a lack of consistency which translates to slow initial decisions, proposals being turned down which would previously have been accepted and, most frustratingly, it’s also now more likely that some lenders will look to move the goalposts should something even fairly minor crop up during underwriting. More than half of the brokers who took part in our last survey said that around a quarter of the transactions they started but which did not complete were caused by lenders actions, inactions or demands.
A quick initial decision is vital in cementing the broker’s relationship with their client. A broker wants to be able to go back to them promptly to give them the assurance that the funds will be available for their purchase or for a business deal to go ahead. Equally important to a broker is a swift ‘No’ which enables them to quickly refocus their efforts elsewhere or consider a different approach to finding a funding solution. Delays and inconsistencies caused by the lender can translate into cases taking longer, or in the worst examples, falling through.
When choosing a lender, of course the first consideration is always whether they can meet the customers’ requirements. If there’s a tick in that box, the next question brokers should ask themselves is whether the lender is going to help them to develop their business or is more likely to erode it. The value a lender can offer a broker is driven by making quick initial decisions, consistency in its underwriting and reliability in delivery. When these elements are coupled with competitive pricing, you have a winning combination for the customer, the broker and the lender.