"While one could be forgiven for assuming that brokers would be keen to talk about rates, and while there was a certain amount of this, pricing was by no means top of their concerns."
It’s really refreshing when you can get out of the (back) office and physically get in front of brokers as there’s nothing as informative and productive for a lender. With that in mind, I managed to take time out recently and meet a number of brokers in London to discuss all things short-term lending, and, as expected, it was well worth it.
What’s important in these meetings is to create an atmosphere where brokers can be completely honest with you about your proposition but also about the competition and the wider marketplace. And, judging by the challenging and wide-ranging conversations we had, I fully believe that we were successful in achieving that.
While one could be forgiven for assuming that brokers would be keen to talk about rates, and while there was a certain amount of this, pricing was by no means top of their concerns. Instead, the main points that came out of these conversations were to do with speed and certainty.
When brokers talk about speed, they mean the ways in which speed is critical to them and their clients. Of course, speed means different things to different people. The client will usually want the deal to complete as quickly as possible so they can get on with the reason for the loan; they will then want to get the project finished as quickly as possible so they can exit the loan. Meanwhile, brokers focus on areas where speed (or a lack of it) is critical for them: for example, with release of funds; Land Registry; legals; valuations and so on.
However, speed can be important before the deal has even been agreed. Brokers were reminding us that increasingly their short-term clients are approaching multiple brokers with their case, who in turn are enquiring with a number of lenders. For them, if a lender’s business development manager or broker desk doesn’t get back to them immediately then it’s not just the lender who will lose out on the case but the broker as well.
They’re not asking for a decision in principle in 30 seconds but an acknowledgement that they will consider the case and also an indication of the timeframe that the broker and client can expect it. Essentially, lack of timely communication increasingly means a lost case. And brokers are only human: if a lender lets them down and they lose a client because of it, then that lender is not going to be top of the queue when they next get a case. Or the one after that.
This highlights how brokers’ two main issues are inextricably linked; namely speed and certainty. In order to keep their clients happy, they need lenders to act quickly, and to do what they say they will do when they say they will do it. Certainty doesn’t just apply to saying yes to the case or completing when it’s supposed to; with short-term lending, brokers need to be able to reassure their clients that the lender is indeed on the case and doing what’s expected in a timely fashion.
Ultimately, if brokers are to convince their clients that the difference between 0.59% and 0.69% per month on a bridging case really isn’t the most important factor but that in fact what matters is how quickly and what how much certainty a case will progress (and complete), then lenders – especially those who (sensibly in my opinion) aren’t operating at the sharp end of a price war – need to show why those factors are indeed the ones worth considering. That’s why at London Credit we don’t just listen to brokers but also put their needs first. We strive to respond to brokers and get an indicative offer out within the hour. In addition, when we say we can fund a case, it means just that. The reality is that this isn’t necessarily the norm in today’s price-obsessed market.
