In a poll of brokers carried out by West One Loans, almost half said the new entrants hadn’t made any sort of positive impact on the market, while one in four brokers think the impact has been wholly negative.
In a damning indictment of the new entrants, 15% of brokers suggested lenders are rushing into an industry they don’t understand, for short term gain. 11% brokers also said the increasing number of lenders has made writing bridging loans more complicated because of the greater range of criteria between lenders.
Duncan Kreeger, chairman of West One Loans comments:
“With the bridging industry performing so well, inevitably it has attracted some unscrupulous figures from the mortgage industry’s past. They see bridging as little more than a cash cow to be plundered in the short term. They offer misleading headline rates, hoard proc fees, and attract negative press to bridging as result.
"We need to make it clear there is no room for these people in the bridging market. Professionalisation of the industry has come on leaps and bounds in the last few years – that is partly what is driving its success.”
Brokers did reveal that some positive changes have resulted from the influx. Just over a fifth (22%) said they felt pricing has fallen because of the increased competition amongst lenders.
On top of that, one in ten think the spate of new lenders has lead to a tangible increase in professional standards. 13% of brokers feel having more lenders in the market has improved the overall quality of service.
Duncan Kreeger said:
“It’s clear brokers think the influx of new lenders has improved some aspects of the industry. They say competition has increased, which has pushed down costs and helped raise standards - but only up to a point. The shadier operators are threatening to sully the reputations of all bridging lenders.
"Despite the fact they are writing more bridging loans, and expect to write 27% more loans in 2012, brokers clearly aren’t enamoured with all the new lenders in the market. It is important lenders keep brokers sweet if they want the growth of the bridging industry to continue unabated.
"That means being flexible on the types of loans they can offer brokers, and having access to different funding lines. It also means not drowning them in red tape, not hoarding proc fees, and rewarding brokers who push through plenty of deals.
"Lenders need to recognise that maintaining high professional standards is important, not just for their own balance sheets, but also for their relationships with brokers and the reputation of the industry.”
