Covid-19 has forever changed the City’s lending sector


Paresh Raja, CEO of Market Financial Solutions, predicts a vastly different lending sector after coronavirus. 

Covid-19 is continuing to have a transformative impact on businesses across the UK.

Faced with the sudden onset of lockdown measures, companies across all sectors were forced to completely change the way they operate while still being able to serve the needs of their clients and customers. For some, the transition has been easier than others. 

Now, over three months since the initial lockdown, non-essential businesses are finally returning to the workplace. By relaxing certain social distancing measures, the UK Government is hoping to kickstart the economy and get businesses up and running once again.

It would be wrong to assume, however, that things will simply go back to normal. In my opinion, the lockdown has brought about longstanding change to the way companies provide services and operate. 

As someone who has been operating in the specialist finance market for well over a decade, I believe this statement rings particularly true for the lending sector. Real estate was one of the many sectors adversely affected by the pandemic.

The UK Government’s decision to actively discourage people from moving homes brought property transactions to a standstill.

In response, many big banks and mortgage providers immediately retreated from the market, pulling loan products off the shelves and refusing to accept any new applications. 

For a market that began the year in a position of strength, suddenly buyers and sellers in the middle of a transaction found themselves in a precarious position.

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What we witnessed in the coming months was similar to what occurred during the global financial crisis. With banks limiting their services, specialist finance providers stepped up to fill the void left by the big lenders. 

This has been paramount in ensuring existing transactions can be completed without falling apart to the detriment of the buyer and seller.

By being on hand to process enquiries, these lenders have also ensured that brokers and intermediaries can support their clients with minimal disruption. 

The reason why specialist finance providers, and in particular bridging lenders, have been able to operate has to do with the nature of the finance they offer.

Bridging lenders are renowned for their ability to quickly deploy funds within days of receiving an enquiry. The loans issued are also tailored to the individual needs of each case, no matter how complex they may be.

This flexibility and willingness to work with brokers and borrowers means that they are naturally positioned to adapt as and when market conditions change. 

As lockdown measures slowly ease, we will now see more traditional lenders once again making their return to the property market. However, they are returning to a market that has changed substantially.

Over the last three months, broker and borrower awareness of specialist finance has risen significantly. New relationships have been formed and there is likely to be an increase in demand for loans that can be deployed quickly. 

Over the coming months, big banks and mortgage providers need to adapt to these new conditions. Client preferences are changing, and the market has now become fully aware of all the loan and finance solutions that exist beyond the high street.

In the end, this will ultimately benefit brokers and borrowers, ensuring they have access to market-leading products. 

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