CEO's switch is proof that intermediaries can cross the great divide…
Brokers and lenders have long been regarded as having a bit of a ‘them and us’ relationship – two parties whose work is inextricably linked, yet often remaining on different sides of the fence in the mortgage industry.
So when one makes the move to ‘the other side’, such as Chris Fairfax, CEO of specialist lender Catalyst Property Finance, it makes for a compelling transition.
Fairfax (pictured) drew upon his experience as a broker to shape Catalyst’s proposition, and today it provides first and second charge lending, up to 80% LTV.
“My career background as an intermediary informs everything I do as a lender,” Fairfax told Mortgage Introducer. “Before starting Catalyst, I co-owned a large specialist mortgage packager which was - and still is - very successful in originating loans via broker partners.
“A key part of my role was managing the bridging finance desk, which meant I worked closely with most of the UK’s specialist lenders. I was very fortunate to collaborate with some of our industry’s top talent in risk, marketing, sales, and management.
“Like many of my Catalyst colleagues, I have sat on the ‘other side of the fence’ when I’ve felt lenders were complacent. I know how horrible it is to lose an opportunity you’ve worked hard to originate.”
How does a lender design its proposition?
This insight enabled Fairfax to take what he considered the best parts of his intermediary experience to design a lender that consciously met the needs of brokers. This included launching without any minimum flow commitment, which was a big shift in the industry standard, but which he conceded many have now adopted. It also offered 2% procuration fees for intermediaries, at a time when they weren’t generally rewarded for follow up work.
Seven years in, the Bournemouth-based business is still striving to provide a USP to brokers in what is a very competitive space.
“This could be in terms of risk, for example, lending from aggregate value on 10 units or less rather than block, utilisation of title insurance, wide credit parameters for refurbishment lending, and acceptance of adverse credit profile,” Fairfax said.
“That’s not to say that we always get it right, we have dropped the ball from time to time. But our culture is very much one of accountability, and we’re quick to pivot and improve when we get it wrong.”
Read more: Catalyst relaunches 80% LTV specialist bridging
How has the specialist finance industry changed?
The specialist finance industry is almost unrecognisable from when he started nearly 20 years ago, Fairfax believes. It has improved, in his view, and enjoys greater market education. Borrowers are treated better at every stage throughout their loan cycle due to better practices within lending organisations, reduced cost of borrowing for both consumer and lender - due to significant investment from institutional investors - and the use of technology which enables transaction transparency. Standards are also driven up by the competition existing in a saturated lending market.
Fairfax said he was ‘cautiously optimistic’ about current origination and redemption performance, compared with that of 2023. Catalyst saw a significant increase in all sales metrics and improved redemption statistics, from the beginning of the year. Sophisticated investors are starting to see value in asset prices, which is stimulating purchase activity, he explained.
“This sentiment is not echoed in the mainstream market,” he observed. “Consumers are still rightly concerned about interest rates continuing to be higher, for longer than hoped. And while inflationary pressures have eased recently, geopolitical instability may create a stagflation environment creating challenges for real estate prices in the medium term.”
Currently, people need a compelling reason to change property, Fairfax added, and the rationale for investment in UK real estate is not straightforward. So what, to his mind, makes a good broker?
“In a market where execution risk is higher than normal, a great broker provides holistic advice which considers total cost and lender performance,” Fairfax reflected. “It is a real skill to understand the vast complexities and nuances involved with bridging finance and select a lender for each client who can accommodate the risk at the best price, in the timescale required.”
It’s important, he said, that brokers present risk comprehensively and accurately to maximise success. It is also vital to present the right risk to the right lender, so taking time to maintain lender knowledge is essential.
“We talk daily with brokers,” Fairfax commented, “and the ones who are busiest have spent time building their networks, both client and lender, as well as building their reputation, their brand.”
