"Should we be concerned by this influx in new lender business or do the nay-sayers represent a reactionary response to the hard-won realities of competition?"
Rising levels of competition between lenders, stable (and attractive) rates as well as an irrepressible upsurge in demand from ‘non-conventional’ customer bases previously left to the tender mercies of an increasingly stringent and narrow minded mainstream sector, have all been identified by experts as attributable factors in this unfolding success story.
Yet, surprisingly, recent data suggests that almost three-quarters of industry respondents now feel that there are too many lenders entering the sector, with critics suggesting that new-comers will struggle to compete with existing lenders on price and may be forced to adopt increasingly risky business models or adopt inferior products in order to attract requisite levels of custom. So, should we be concerned by this influx in new lender business or do the nay-sayers represent a reactionary response to the hard-won realities of competition?
Well, from an industry point of view, of course, heightened levels of competition can be challenging. Lower rates and higher LTVs have undoubtedly helped to form the basis for current gains within the wider financial market, yet nobody would claim that pricing structures such as these don’t impact (sometimes negatively) on lenders. Nevertheless, competition is an essential component in ensuring increased viability and growth (especially in an industry defined by flexibility), simultaneously pushing up service levels, promoting the creation of new and diverse products to suit all needs and encouraging innovative new ways of thinking to meet the challenges of the age.
Crucially, moreover, it places the consumer at the forefront of the entire process; forcing lenders to maintain a pro-active presence while also helping to establish bridging as a new mainstream lending option (as opposed to an ‘alternative’ means of finance). Where problems may arise is if lenders choose to cut costs inorder to preserve their market share and this is why the industry needs to be vigilant when it comes to keeping standards high. Because a good reputation can be lost just as easily as it can be gained. They say that ‘nothing succeeds like success’ and we should acknowledge that the rise in new challengers is merely a reflection of this happy state of affairs - something to be cherished. Competition isn’t the issue here; it’s the way in which we respond that counts.
