Bridging lender Fincorp has questioned claims that gross lending in the short-term mortgage market would hit £1.5 billion in 2012 and keep booming this year, branding them “potentially dangerous”.
The lender, which is celebrating its 25th year in business, says it is time the bridging industry “grew up” and recognised the damage that hyping up the size of the market could do longer term.
Fincorp director Nigel Alexander said: “There’s a lot of money swilling around behind the bridging market because it can offer great returns to investors but there is only so much good bridging lending out there.”
Alexander (pictured) believes there are lenders in the short-term market “dangerously close” to dropping their underwriting standards just to compete to do business.
He said: “The danger is that every man and his dog thinks he can be a bridging lender and make pots of money. Investors are baying for more business and lenders without experience are taking the money and fuelling the myth that the bridging market can keep growing and growing.
“Well it can. But only because inexperienced lenders start to relax their criteria to get the loans out. We saw that out of control competition in the frothy days of the mortgage market and ultimately it’s the borrower who pays for lender greed. Bridging industry professionals should take a care not to fall into that damaging cycle.”
Alexander’s comments come after the lender decided to revamp the Fincorp brand to celebrate its 25th year in bridging and re-iterate its commitment to make bridging “clear and simple”.
He explained: “Fincorp has been around the block, survived through three recessions and we know our stuff. But we recognised that the bridging market is constantly changing and we’re simply making sure we stay on top of our game.
“That’s what prompted us to rebrand with a new logo that reflects our whole ethos – clear and simple full stop. There are so many good reasons to use bridging but we believe the whole market needs to grow up and start being honest with the borrower and their investors.”
As part of its 25th anniversary year the lender has also pledged to support the Cystic Fibrosis Trust, with a commitment to donate a minimum of £100 per deal completed during 2013.
Matthew Anderson, fellow director at Fincorp, added: “This charity is close to my heart particularly as my son suffers from the disease. It’s a privilege to be able to support such a good cause and I’m proud to know Fincorp is the type of firm that takes its responsibility to give back to society seriously.”