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How can mortgage brokers future-proof their business?

The property finance industry is rapidly changing. Everyone who’s part of it wants to know where we are heading, what’s working and what’s going to change.

In order to delve deeper into the matter, we here at Spotcap, with support from FIBA and the NACFB, recently surveyed 132 commercial finance intermediaries, including mortgage and property brokers. After all, the more we know, the better we’re equipped for what lies ahead!

The elephant in the room – the £22 billion funding gap

Why does it matter? According to recent statistics from UK Finance, UK lenders approved over 290,000 loans and overdrafts to SMEs in 2018. However, despite the healthy size of the SME loan market in the UK there is still a £22 billion funding gap, with many businesses struggling to source capital for their needs, according to the Bank of England.

What’s more, recent stats from the British Business Bank highlight the importance of intermediaries, stating that businesses receiving external support when looking for funding are 25% more likely to become high-growth companies. Great motivation for brokers to keep up the good work!

So, what did property and mortgage brokers had to say in our survey about their business and the state of the industry?

An overall positive outlook

When asked about the future outlook, two thirds of respondents expect the number of financing agreements they arrange over the next twelve months to rise; two out of ten believing that they will stay the same. Property finance intermediaries surely are positive about the future – but what do they think will drive their business’ growth? For six out of ten respondents, attracting new clients is key, followed by the potential to better understand their clients’ needs.

Barriers to business growth

Despite the optimistic outlook, property and mortgage brokers also highlight a number of challenges. The biggest barrier for almost half of them is the challenge of generating new business. This was closely followed by the number of documents required to process an application as well as understanding the offerings of the different lenders.

Here is my number one tip to stay ahead of the game: find your gap in the market. How? Think about ways your offering can differ from other intermediaries. For example, have you considered complementing your offering with other loan options?

Here at Spotcap we’ve seen a rise in the number of loan applications from mortgage brokers as they increasingly look to expand their loan portfolios. Clients trust their mortgage broker and, often when they are looking for a mortgage, they're also in need of a business loan, perhaps for inventory, hiring staff or refurbishing the business. As you diversify your portfolio, you’ll become a one-stop-shop for your clients' financial needs.

One thing is clear, the property market is constantly changing. The more adaptable and flexible you are as an intermediary, the better and faster you can compete and grow your business.

For more insights, check out Spotcap’s full survey report here.

*Darwin Delahaye is the Senior Partnership Manager at Spotcap UK

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