Shawbrook’s Commercial Mortgages division recently undertook the second of its quarterly broker surveys. The ‘broker barometer’, as we call it, is designed to test the temperature of our commercial brokers – and get a reading of the commercial market more generally in so doing. After all, if anyone has their finger on the pulse when it comes to detecting the trends and fluctuations in this industry, it’s the intermediaries.
We were encouraged, though not surprised, to find that more than 80% of the broker respondents felt that the short term loan (STL) market is ‘growing’ or ‘growing rapidly’. This is certainly our thinking, and we are committed to doing our part to help nurture that growth – for everyone involved – rather than just taking a share in it.
As the economy continues to look up and house prices continue to rise, property investors, bolstered by these developments, are gaining in confidence and taking a more active approach with regard to their portfolios. Slowly but surely, then, mobility and liquidity in the market are on the up, and short term finance is one of the funding types oiling the wheels. An STL can be just what an investor client needs to seize opportune deals, leverage their portfolio, and make their money work harder for them.
In recognition of this, we’re doing what we can at Shawbrook to cater for clients like these, allowing investors and brokers alike to make the most of this burgeoning market. To that end we have recently introduced some new products, as well as tweaking and refining existing loans and processes.
A key element in the streamlining of our processes was the introduction in September 2013 of a desk solely dedicated to STLs, which we created in direct response to a significant increase in demand for these loans from our brokers.
This is a trend that has been reflected more widely, with the Association of Short Term Lenders (ASTL) announcing at the end of 2013 that short term finance lenders had hiked gross lending by 38% in Q3 and that applications had increased at a similar pace. In keeping with this momentum, Shawbrook’s STL desk is also designed to cater for the speed so often required with these deals. The presence of several mandated lending managers on the team aids that speed, as does our ability to instruct valuation and our in-house solicitors simultaneously. In addition to this, we recently announced two more appointments to the STL desk and introduced new and rapid process and valuation service level agreements.
We’ve made these changes to ease and optimise the process for our brokers and their clients, but also because we’re firm believers in innovation being the key to nurturing the STL market rather than lenders engaging in rates wars. As we see it, the most exciting developments in the short term arena of late have been those relating to innovation – the entrance into the market of new products, new processes, even new funding lines and lenders. For our part, we’re doing our utmost to continue to improve in this area, with the introduction of new products like our recently announced STL6. This is an STL for investor clients wishing to purchase a property with a view to undertaking heavy refurbishment, before renting out or selling on. We’ve found it is a particularly popular option for buy-to-let (BTL) clients, which is maybe unsurprising given that the CML’s latest figures put the number of BTL loans at 23% higher than the same time last year.
Of course with STL6, and all our products, we are competitive in our pricing, and incentives such as our existing client discount and having the lowest total costs are an important part of that. However, it’s even more important to us that we are totally transparent about that pricing – particularly in this fairly young and so far unregulated market. We’ve been vocal advocates of commission disclosure for some time now, but we’re equally committed to being upfront about our pricing. We’re not about luring people in with one price then rate-loading later in the process. What you see at the start is what your client will get!
As is probably becoming apparent, we’re not shy when it comes to talking about Shawbrook’s drive with regard to the STL market. There’s a discernable buzz in the air around STLs – we’re excited by it and we’re not afraid to share that! That’s why we’re so committed to setting standards and actively growing the STL market – so brokers, lenders and clients alike can share in that buzz, sustainably. That way everyone can make the most of the short term finance arena, and no one gets the short end of the stick!
Karen Bennett is sales and marketing director for commercial mortgages at Shawbrook Bank
