11 September 2019
Brokers play a significant role in galvanising activity within the bridging market.
They are, of course, the people trusted by property buyers, investors and high-net-worth individuals to help source the best, most suitable financial product for their particular needs.
It is important, therefore, that more and more brokers are attracted into the bridging space, in turn ensuring lenders and private clients can build relationships. But how do we, as bridging companies, achieve this?
From my perspective, there are three clear approaches short-term lenders can take. The first, and perhaps most common, is to create increasingly attractive incentives for intermediaries.
One may reasonably assume that the best way to improve engagement with financial brokers is to offer them greater incentives — higher commissions for introductions that are made and deals that are done.
While this tactic may deliver some success, it also risks lenders competing with one another to offer the best incentives; subsequently, the quality of the actual bridging products being offered suffers as companies become preoccupied with getting more introductions from brokers in the first place.
What’s more, there is also a good chance lenders will continue to fight over the attention of a select group of brokers — the ones who already understand and recommend bridging loans to their clients. It will not necessarily increase the number of active brokers in the bridging sector.
The need for education
In the second half of 2018, Market Financial Solutions commissioned a survey of 2,000 property buyers, which underlined the need for education. The research found that 37% of homebuyers relied on a broker to recommend different financial products available to them.
However, almost half (46%) stated they did not have enough knowledge or confidence in finance options other than mortgages to consider using them, while even more (49%) did not have a strong enough understanding of bridging loans or the situations in which they can be used.
I strongly believe lenders must prioritise education alongside their primary efforts to sell their products or services. There ought to be clear, honest and useful material provided to intermediaries and their clients to ensure people feel confident enough to proceed with getting a bridging loan; over time this will help grow the number of brokers that lenders can work with.
Deliver the goods
The third and final approach I would recommend is for lenders to place more value on transparency and honesty when working with brokers.
As the bridging sector has become more competitive, with more firms entering the market, there has been a propensity from some to double down on their marketing efforts; luring brokers through the door with attractive offers and ever lower rates.
This approach is unsustainable. Most notably, the problem arises wherein lenders cannot follow through on their promises — the rates advertised fail to materialise as they are not available to the majority of clients.
If bridging lenders want to attract more brokers, quite simply they must ensure they are delivering an exceptional service. From handling enquiries professionally and offering bespoke loans through to drawing up fair terms and delivering the finance quickly, lenders must instil trust and confidence from brokers.
Prioritising honesty and diligence will help generate more enquiries, more repeat business and, in the long term, support the growth of the UK’s bridging market.