THE CLEAN CANVAS – PRIVATE MORTGAGE FINANCE
Has
regulation of the financial markets crimped, crippled or created opportunities
for business expansion? Has it saved average punters from
themselves? Has it “grounded” – or at least shackled - the savvy punter? Has it
created golden opportunities for those in a position to properly assess risk,
but limited their ability to do anything about it? Where are we in the cycle of
the property markets anyway (and relative to the location, population and
economic base etc can we afford to entertain such generalities)? What is the
“opportunity cost” when an “opportunity is lost” and if so, does that
opportunity cost outweigh the extra cost of private first mortgage bridging finance, where, within reason, each
proposal starts out as a clean canvas?
There are no simple answers to any of those questions, and if
that is the case then why ask them? Because if we didn’t, we would all be a
proverbial deer in the headlights. It’s simply a fact that NCCP and responsible
lending considerations are with us to stay. Deal with it. I think that the more
pressing question is, “Have the banks and other “Tier 1” financial institutions
dealt with regulation and created an environment where business can assess and
act quickly on opportunities that present themselves?” From the conversations I
continue to have with potential customers and finance brokers, the resounding
view seems to be “Sort of” for major enterprises and “No, they haven’t for SME’s”
Is this attitude of caution by the major financial institutions
justifiable? Is it excessive? Does it simply take too long to obtain an answer
from your bank, and precisely when is that answer actually an answer, and not
just, “Well, it certainly fits our criteria” from the BDM, to “What were you
thinking?” when it arrives at “Credit”. A resounding “yes, yes, yes, OOPS, sorry
no”?
In 2001, Federal Reserve Chairman Alan Greenspan mentioned in a
BBC news article that “the overly cautious nature of the banking sector
introduces certain volatility in earnings” that increased regulation could
introduce. That certainly turned around in a short timeframe. The GFC occurred
in and around 2007 onwards, with fallout arguably still occurring today. Have
pendulums swung too far both ways? Is this fallout still occurring because of
fundamental and/or technical economic circumstances, or simply because too many
people have access to too much half-understood, often conflicting and downright
inaccurate information. Again, are we the deer in headlights?
As I have stated, there are so
many answers to these questions, which themselves often create other questions.
It depends on your own experience,
financial standing and the “need for speed”, amongst a myriad of other factors.
If you are in a financial position where your Statement of Position, DSR and
credit history are in shape sufficient for the bank to nod and sign off, good
for you. Though anecdotally, I still am told that that doesn’t mean the fat
lady has sung.
There is however one thing that I am certain of – if you feel
strongly about an opportunity, then you owe it to yourself or your customer, to
explore all avenues; avenues such as private
first mortgage bridging finance that we are able to consider and
arrangeat Little Rock Investments. So, call, and discuss. Though we have many,
and have recently expanded our base in both, we are looking for long-term
relationships with quality customers and high net worth sophisticated PRIVATE
LENDERS.
Remember, there is not set guidelines catering to the lowest
common denominator in a branch structure. There are no BDMs or credit
departments. There is just “Yes or no!”
