'Inevitable' consolidation in the bridging sector 'will see a number of people without roles'
An inevitable consolidation within the bridging finance sector in the future will see a number of people without roles, one lender has claimed.
The comment comes despite some lenders debating whether the bridging market was facing a skills crisis.
It was highlighted that an increased number of lenders were bringing in people from outside the sector and training them up in order to replenish the existing pool of talent being drained by increased competition.
However, what wasn’t discussed was the impact an economic downturn could have on those working within the sector.
The impact of an economic downturn
Michael Dean, principal at Avamore Capital, said that the industry would “definitely” see a lot of people without work in the event of a market downturn.
“There will be an inevitable consolidation in the sector within the next 12-18 months, which will see a number of people without roles.”
Jonathan Sealey, CEO at Hope Capital, added that any downturn where firms go out of business was likely to see people laid off, but felt the bridging sector tended to do well in both positive and less favourable economic cycles.
“In periods of growth, developers build more to capitalise on a buoyant market, often using bridging finance to do this.
“In a downward cycle, the mainstream lenders tend to tighten their criteria and lending to both individuals and businesses was severely restricted, so people turned to short-term secured loans for the finance that they needed instead, as bridging lenders will look at each case on a more individual basis and so are often more willing to lend.”
Shahil Kotecha, CEO and principal at Pivot, believed that a downturn would result in opportunities for those lenders with strong balance sheets and robust funding lines.
“There may be consolidation as default rates increase and some lenders have to fold.
“The result is likely to be some employees without jobs.
“However, this market has proven to be resilient and the skills developed in this market are wholly transferable.”
‘There is always the possibility that some lenders will downsize’
“In a downturn, there is always the possibility that some lenders will downsize or even cease trading altogether,” said Alan Margolis, credit and operations director for short-term lending at Masthaven.
“However, the extent of the impact of a market downturn on job security will very much depend on the specific nature of the downturn.”
Paresh Raja, CEO at Market Financial Solutions, said that if lenders were running on low margins and working on borderline rates with higher risk, there was a higher chance of people potentially losing their jobs.
“The risk of this increases should the market experience a sharp downturn, or if the number of lenders surpasses market demand.
“To mitigate the chances of this happening, foresight and long-term planning is vital from lenders.”
“For example, it is likely that interest rates will be raised to 0.75% sometime in 2018, and it is the responsibility of lenders to plan for the future and allocate their resources accordingly, particularly when it comes to new hires in the medium to long term,” Paresh claimed.
If there are potential job losses, those within the bridging sector may turn to other areas of finance.
“The bridging market does have a wide spectrum of ages across the workforce, unlike some other parts of the financial services industry,” said Adam Tyler, executive chairman at the Financial Intermediary & Broker Association.
“This does bode well for the future as there are opportunities within the lending community for employees to take on more accomplished roles.
“This is training for the future and skills being learned are, of course, transferable to other sectors.
“So, this can only be a good thing for the UK lending market.”