David Sheppard, managing director of Perception Finance recently wrote comments in Mortgage Solutionsbemoaning lender service and said that service levels had got worse “with a lot of lenders”. While mostly referring to mainstream lenders is does raise the question of whether it is ever justifiable for lenders to provide bad service. After all, more than anything else lenders are in the service business.
This is even more the case in bridging and short-term lending where there is even less excuse for bad service. Bridging is all about speed, individual underwriting and personal service, so a delay of any sort here can jeopardise a whole case.
There has been something of a price war in the bridging market since the start of the year, while mainstream lenders have been scrapping over rates for a number of years now. However, while everyone wants cheaper rates, it is almost irrelevant how low rates go if the service is not there to back it up. Ultimately, as a lender, if you are not providing the level of service that brokers and borrowers need, then you’re not doing your job.
Unfortunately, David’s findings were backed up by the results of a recent survey that we conducted at Hope Capital, where 21% of broker respondents said that getting approval from other lenders can cause the most delays in the loan completion process. The only things to score higher were getting all the information from the client and the role that solicitors play – which can be particularly testing in a bridging case as so many solicitors are unfamiliar with what is required.
But in a profession where 47% of brokers say that speed of service is one of their top three priority areas, to not deliver must lead brokers to question what these lenders are doing in business.
In the bridging industry if a lender takes a long time, or, worse still, says yes only to change their mind along the line, then it could jeopardise a borrower’s purchase. This is particularly the case when the purchaser is a developer, in a competitive bidding situation or buying at auction.
Many service problems seem to occur after a lender reduces their rates, but lenders know when they intend to do this, and they know it is likely to result in an uplift in business so it is essential that they sort out their staffing in time. If you can’t cope with the volumes then keep the rates where they are.
Similarly, holiday time occurs at the more or less the same time each year so lenders need to plan ahead so their service is not affected. Ultimately, if you cannot cope with the volumes then your rates need to rise to be less competitive rather than keep accepting volumes and then not be able to cope with them.
Both lenders and brokers expect speed and service. In the world of bridging this should mean a loan completion in days not weeks and should include being able to speak directly to an underwriter or a senior decision maker. Not providing this level of service lets down the very people you are in business to help.