Use the form below to locate a Broker in your area:
Press Centre
Find all the latest press releases here along with contact details for NACFB representatives if you would like comment on any area of the commercial finance industry. You can also sign up to our mailing list to receive e-mail updates.
View all >>
News & Events
All the latest NACFB events - what's on and where it's happening. Click here for a full calendar of NACFB events.
Keep up to date with the latest news from your Association, changes in the industry which could affect you, or our Legal & Compliance updates. Click here for more.
Click here for the latest copy of the NACFB Newsletter. You can also sign up to our mailing list to receive e-mail updates.
View all >>
Member Resources
This is the members' only section of the site. In order to access the information here, please log in. If you are not a member, please click here to find information on how to become a member of the Association.
View all >>
Become a member
The NACFB is the only UK trade body dedicated to the commercial finance broker. We represent members from across the whole commercial finance market: from buy-to-let specialists and commercial mortgage advisers to vehicle finance brokers; from leasing and asset finance specialists to factoring brokers. All NACFB members comply with an industry recognised Code of Practice
View all >>
2008: The credit crunch - and the importance of brokers
11th January 2008
Estates Review
February edition
2008: The credit crunch - and the importance of brokers
If you work in the financial services industry the words ‘credit crunch’ have to have been the buzzwords of the year. Both trade and national press are full of bad news stories at the moment. Adam Tyler, Chief Executive of the NACFB, looks at the past year and the coming year, and assesses the commercial finance marketplace.There have been a number of doom and gloom stories surrounding the commercial mortgage and property market in recent months, and for those one the peripheries, you would be forgiven for thinking that the commercial finance world as we know it was coming to an end. But if you sort through the stories you’ll find that there are a couple of separate issues here – and not all the news is bad – at least not if you’re a commercial finance broker or if you use one to source your business finance. The problem is that several things have impacted the market at once and the confusion (or ‘uncertainty’ as pundits prefer to call it) that has arisen has blurred the picture.
The first commercial property story which made the headlines in late in 2007 was a downturn (if that’s not an understatement) in the performance of commercial property funds. I was often asked my opinion and how this tightening of the market would affect NACFB members – that is, commercial finance brokers. The answer had to be: “not much.” The vast majority of our members deal with clients who are looking to purchase their own commercial premises. Like their residential borrower counterparts, a downturn in the property market isn’t likely to discourage an owner occupier from buying (in fact, if prices are lower, they are more likely to buy) – so the downturn in commercial property prices isn’t likely to have any kind of negative knock on effect on the brokers who arrange the necessary finance for the purchase.
Commercial property investment is a different kettle of fish altogether. Companies or individuals looking to purchase commercial property as yet another asset to add to their investment portfolios will be affected in a downturn in values and will look to invest their funds elsewhere. However, if has to be remembered that this asset class had been hyped for some time and some inexperienced investors wanted in on the act probably as values had already peaked – so a correction in this market had been on the cards for some time.
The credit crunch is a different issue altogether and this has affected our members to some extent. The origins of this, in the American sub-prime housing market, have been well documented, but the knock-on effects in the UK commercial mortgage market have been along the same lines (although arguably less severe) as those felt in the UK residential mortgage sector. Brokers are reporting that it is more difficult to get certain deals placed; that some lenders are beefing up their underwriting, or lowering the maximum loan-to-values that they will consider; but any tightening of criteria by the major lenders is less obvious in the commercial sector because underwriting criteria are risk based and rates are less transparent.
However, despite the “the end of the world is nigh” type headlines, and being of a naturally optimistic disposition, I prefer to look on the bright side and hopefully offer some comforting crumbs in this winter of discontent. At an NACFB Regional Workshop, held aboard HMS Belfast in the later months of last year, the subject of the credit crunch reared its head (this was the same weeks that a certain Newcastle-based bank had just hit the headlines for all the wrong reasons) and one of our member and ex-president of the Association, David Whittaker from Mortgages for Business, argued that, far from being a problem, the contracted market was actually a huge opportunity for brokers to prove their worth to their clients.
Let me explain. During a time of cheap and easy credit, such as the UK economy has enjoyed over the past few years, by definition, money at a good price is easily found. If there’s lots of money about, there’s fierce competition between lenders to secure their slice of the cake so it’s easier to track down a lender and a competitive interest rate – so, the argument goes, why would a client need to pay for a broker to do the work for them? Although the NACFB in no way supports this argument, it’s easy to see why some people may reach this conclusion. And, as a result, a broker has a much harder job of proving his worth to his clients.
Another indirect result has been that brokers with little or no experience of the commercial market have found it relatively easy to place deals. The results of the survey into the commercial broker market published by Charterhouse in the second half of last year revealed that one of the biggest concerns of commercial brokers is the fear that regulation will be brought to a currently unregulated market due to advice given to clients by brokers inexperienced in the commercial finance industry. How widespread the actual problem is, is unclear, but certainly brokers perceive it to be a big problem.
But now things are changing – and this is a real opportunity for experienced commercial brokers to prove their worth. The market has contracted and lenders are becoming more picky about the deals they will do and increasing the rates they charge. It takes real skill and experience to put a deal together to make it attractive to a lender to secure the best terms for a client. Money is not so easy to come by – and the result is that brokers with experience and knowledge will be able to prove their worth to their clients by finding them a deal that’s both more suitable – and also probably cheaper – than they would be able to find using only their own resources.
The irony is, of course, that brokers are always able to do this; whether the market is liquid, as it has been for the last few years, or in its current squeezed state. The only difference now is that they have the advantage of perception: that it’s easier to define the benefits a broker can bring to your business. But in the current gloomy climate, you must take your chinks of light where you can. And as a certain chain of supermarkets are wont to say: “Every little helps”.
back to press mentions >