Special Features

Covid-19 shows why specialist lending is here to stay

Tiba Raja | Market Financial Solutions
15th May 2020
Tiba Raja MFS
"The Covid-19 pandemic has reaffirmed once again the important role bridging finance plays in meeting the demands of property buyers."

What are the attributes of a successful lender? Is it their ability to handle complex cases? Or does it boil down to the rates and fees associated with their financial products? Ask any broker and you quickly find out that there is no universal answer to this question.

Brokers and prospective buyers often prioritise different things when it comes to sourcing finance, and this is ultimately determined by the unique circumstances of each individual case.

However, based on the impact the Covid-19 pandemic and subsequent lockdown measures have had on lenders, it has become clear that those who are successfully weathering the storm are those who have established and fostered strong relationships with their networks. Now, more than ever, lenders, brokers and intermediaries need to work together to ensure property investors are able to access the capital required to complete on a transaction.

With high street banks withdrawing some of their mortgage products during the lockdown period, demand for specialist finance rose significantly. Buyers in the middle of transactions were suddenly encountering delays from mortgage providers, putting the entire completion at risk of falling through. Much like the global financial crisis, alternative lenders are stepping up and providing assistance to borrowers to ensure property transactions are completed.

A market in transition

Prior to the coronavirus outbreak, the number of new lenders entering the bridging market was rising. Awareness of specialist finance products was rising among property investors and brokers. In turn, this was increasing demand for flexible short-term funding solutions and bridging lenders.

In this highly competitive market, brokers and borrowers benefited from a greater availability of products. However, this was also having somewhat of an adverse effect – lenders’ margins were being compressed in a bid to outcompete one another. Established lenders like Market Financial Solutions, however, remained focused on the quality and efficiency of the services being delivered.

Now, Covid-19 has posed significant challenges for these new lenders who have not yet encountered a crisis of this magnitude. On the other hand, established lenders who have forged strong relationships with their brokers have been able to deploy bridging loans right in the midst of this pandemic, even for the most complex of cases.

At the moment, it looks as though the property market could soon be on the path to recovery. The UK Government has announced that in England, buyers and renters are now able to move to new properties.

Specialist finance is here to stay

Overall, the Covid-19 pandemic has reaffirmed once again the important role bridging finance plays in meeting the demands of property buyers. Their flexible and fast approach has been vital for those who have suffered delays from mortgage providers during this trying period. That being said, the virus outbreak is also consolidating the market – it is testing the capabilities of existing lenders who are, in turn, adapting their services to meet everchanging conditions.

Once we have overcome the coronavirus outbreak, brokers and borrowers will benefit from a specialist finance market full of lenders who have refined their craft and demonstrated their expertise in handling cases during difficult trading conditions. With demand for property remaining strong, this is good news for current and future property buyers.

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