There are a growing number of commercial mortgage lenders in the UK market, all putting out a strong message to residential brokers about how they can increase their fee income by helping clients with commercial mortgage enquiries, instead of turning them away.
While many individual residential brokers and distributors may not have the time and resources to develop their own skills and knowledge in the commercial field, they can still earn additional fees by referring enquiries to a commercial specialist broker or packager that has the experience to handle the case.
At the moment, however, residential brokers becoming more involved with commercial mortgages will be struck by the lack of access to online mortgage systems for selling, processing and managing their commercial business.
Within the residential, broker-distributed mortgage sector, technology is regarded as one of the major ways in which lenders can gain a competitive edge by offering fast, seamless systems to brokers. It’s simple – if brokers can secure an online offer while the customer is still sitting across the desk, why would that customer want to go elsewhere?
Likewise, if the case is more complicated and the services of a packager are used, then the packager who can produce a fast-track range of options for the client to consider will be able to attract more business because of this technological capability.
Fairly limited
Although facilities exist within the commercial mortgage sector for online product sourcing, these are fairly limited as lenders’ presentation of product criteria varies dramatically. Without a broader base the system is not so much sourcing, but simply a marketing vehicle. In addition, the commercial sector lags behind in the provision of the sort of online facilities that are now standard in the residential field.
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This is for a number of reasons, but principally because the availability of commercial mortgages through brokers is a relatively new phenomenon. Obtaining a commercial mortgage was once largely a matter of the would-be borrower approaching their existing provider of banking facilities to negotiate a deal. This approach has no need for sophisticated online systems, so there was nothing to build on as the market moved into broker distribution.
A second reason why technology is lagging behind in commercial mortgages is that, although there are a number of new lenders, the industry is still in its infancy and the resources required to set up the online application and processing facilities that residential advisers now enjoy can be daunting. In addition, the variety in lending makes the process of building systems that much harder to achieve.
Functionality
The good news is that as the industry becomes reliant upon technology it will be incumbent for all intermediary lenders, irrespective of sector, to have this functionality in their armoury. It is clear that although the pace of development and the scale of the functionality may trail behind what is achievable with residential property – the trend is set and the commercial market will follow. This would have been unbelievable just four years ago and is another welcome indicator of the importance now being placed on broker distribution.
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At Commercial First we pioneered an online Decision in Principle function nearly 3 years ago. I can exclusively reveal that we are in final testing of our new online system, and without divulging secrets it will set new standards for the industry.
Commercial mortgage broking and lending has gone through a considerable evolution in the past five years and this will continue as online systems are launched. We welcome this, but are keen to ensure a balance is maintained between the speed and ease of online functionality and traditional customer service from good people. Combining these two is arguably the key to success in residential lending – unsurprisingly commercial lending will not differ.
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