Brexit could be ‘silver lining’ for principal lenders

Brexit could be a ‘silver-lining opportunity’ for principal lenders as a result of some firms losing their funding lines, according to Paul Wertheim, operations director at Mint Bridging.

Paul told Bridging & Commercial that financial uncertainty in the wake of the EU referendum could lead to a boost in business for principal lenders who did not rely on cautious funders.

“Some lenders have, unfortunately, lost their funding lines and some lenders have managed to secure new ones,” Paul claimed.

“What we’re seeing is potentially a new growth of the business that usually would have been handled by other lenders – that wholly relied on bank finance – who are coming to us as we have the ability to move fast on a deal.

“It could be a silver-lining opportunity for us.”

Paul revealed that Mint Bridging was currently recruiting a new underwriter in order to cope with the increase in volume.

Jonathan Sealey, chief executive of Hope Capital, agreed that principal lenders had an advantage over other sources of funding.

“Being a principal lender and using our own funds to facilitate loans also means that we are not at risk of having our funding lines pulled at any time,” Jonathan stated.

“Ultimately being a principal lender means that you are in control of your own destiny and your own lending decisions.

“Often it also means that we can make a decision and get the money in the borrower’s account more quickly.”

Despite this, Matthew Tooth, head of distribution at LendInvest, insisted that funding lines would not be affected by the EU referendum result.

Matthew said: “We haven’t seen any change in the appetite of our bank clients to commit to their funding lines and inflows across all our capital sources remain strong.

“Institutions invest for the long term and the banks we work with appreciate the value of the short-term property finance that we provide and our track record.

“And they agree with us that, despite general economic uncertainty, the fundamentals of the residential property market haven’t changed significantly and that the likely path of Brexit will allow us time to make considered decisions.”

Indeed there is evidence to suggest that not all funders have been affected by Brexit fears.

Just last week, Roma Finance secured a significant three-year revolving credit facility from Royal Bank of Scotland.

Meanwhile, Narinder Khattoare, sales director at Kuflink Bridging, believed that, though some funders had been shocked by Brexit, it may not be a long-term issue.

“Clearly there are bridging lenders whose funders have been spooked by Brexit, and in times of uncertainty there is bound to be a reaction where the immediate instinct is to pull back,” Narinder stated.

“I don’t think this will be a long-term phenomenon unless other external factors, such as a significant shift downwards in property prices, come into play.”

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