It’s an exciting time for intermediary news. Scanning the mortgage trade press this week I’ve been looking at the latest hot topics – advances in technology with point-of-sale offers, peaks in gross mortgage lending, and the interest rate rise in November featured heavily in the headlines. Another hot topic is commercial mortgage lending.
Okay, you might say I’m biased as I work for a commercial mortgage lender – but we monitor press activity and we’ve witnessed a steady increase in news stories and articles that feature commercial lending. So what has prompted the sudden awareness of this sector? Well, there are two main reasons.
The first is the level of interest shown by commercial mortgage lenders in the UK market. 2006 has seen lenders launching, such as InterBay, not to mention various rumours of other launches throughout the year. But it’s not just the fresh supply of commercial mortgage deals – demand from intermediaries is also increasing.
Intermediary benefits
It’s easy to get started in commercial mortgages. Many of the intermediaries who put forward their first InterBay loan are new to commercial mortgages. In fact InterBay actively encourages residential intermediaries to add commercial to their repertoire. Every week many intermediaries register with InterBay with the aim of diversifying their business, increasing their earning potential and providing extra support to their client base. In response, InterBay invites intermediaries to attend free training seminars which explain the basics of commercial mortgages – as well as sharing marketing tips and a plan to get started.
One of the key intermediary benefits is the steady and lucrative income stream that commercial mortgages deliver. With higher procuration fees than residential mortgages, an intermediary can earn significantly more with each completion. We’ve witnessed intermediaries who have worked with residential mortgages for years deciding to change their business models and switch to commercial. However, the majority of intermediaries simply add a commercial mortgage service to compliment their existing business.
As well as offering a new service to their existing clients, an intermediary can also expand their client database and open up a new target group – owners of small businesses and commercial property. With less competition between brokers, it’s easier to become the expert in their local area – attending local business forums and gaining referrals from accountants and solicitors.
The future of commercial
In the UK the commercial mortgage market is set to grow. Recent reports state the percentage of commercial mortgages being submitted via a mortgage intermediary is increasing. Also new commercial lenders entering the market will prompt healthy competition between lenders. This is good news for intermediaries and their clients as competition leads to product innovation and lenders focussing on providing great standards of service. Also, with more lenders, there will be more opportunities for brokers to enter the market and get the training and support they need.
In summary, commercial mortgages may be a current hot topic but it’s also a topic that’s going to remain hot for a long time to come.
