Masthaven Group Ltd,
Mimosa House,
12 Princes Street,
London W1B 2LL

Tel: 020 7036 2000
Fax: 020 7036 2001
e: enquiries@masthaven.co.uk

Short term finance

82% of brokers believe short-term lending will grow in 2012

January 6th, 2012

Thursday 8th December 2011  The results of a recent survey completed by hundreds of mortgage intermediaries indicate that 82 per cent of brokers believe that the short-term lending market will grow next year.

The Precise Mortgages Road Shows have come to an end and the red London bus that toured the country emblazoned with pro-intermediary messages has been parked for the winter. Many of the hundreds of mortgage intermediaries that attended the road shows completed a survey giving their views on next year’s mortgage market and despite the challenging environment the results were surprisingly up-beat.

82 per cent of the brokers believe that the Short Term Lending market will grow in 2012 with Edinburgh and London most positive at 90 per cent and 85 per cent respectively. 82 per cent of the brokers cited that the growth would partly be driven by the continued restrictions on the availability of finance from high street banks.
The growth in the Private Rental Sector will continue to grow Short Term Lending according to 57 per cent, again Edinburgh being most optimistic at 79 per cent. 56 per cent said that they believe more brokers will start to operate in the sector as a result of the growth.

69 per cent also believe that high street lenders are deliberately restricting business via intermediaries with London brokers being particularly aggrieved at 79 per cent.

During the programme of road shows brokers were entered into a prize draw for a luxury Harrods Hamper and the 8 lucky winners were:

● Graham Kennedy of Graham Kennedy Mortgages
● Lauren Flockhart of First Mortgages Ltd
● Brian Day of Mortgage Advice Shop
● Steve Lowe of JDS Financial Services
● Keith Ryan of Dunstan Mortgage & Insurance Services
● Keith Jones of Brilliant Money
● Caroline Hughes of Caroline Hughes Mortgage Services

In addition well over £2,000 was raised for the Broomstick Ball for Cancer Research UK.

Alan Cleary, managing director of Precise Mortgages, commented: “We are going to continue to speak out on behalf of the mortgage intermediary as there is going to be a battle with high street lenders over the next few years for market share. Despite the intermediary share of mortgages dropping below 50 per cent for the first time in several years, brokers are still optimistic about the mortgage market in 2012.”

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Are bridges about to get longer?

July 1st, 2011

Having conquered the short term lending market, the entrepreneurial minds behind some of the UK’s leading bridging finance providers are eyeing up the opportunities presented in the less saturated medium term loans market.

“In terms of 2-year to 5-year products, I think there is a niche for it. I think it’s a specialist sector and for those lenders with access to funds, I think there’s an opportunity there,” said Bridgebank’s Managing Director, Laurence Goodman.

Christian Faes of Montello added: “Montello currently does not lend for longer than 12 months. It is a market that we are looking into quite closely.”

Intermediaries within the market appear to be welcoming the possible increase in medium term products, which they see being utilised not only as an additional offering for borrowers, but also as an adjunct to bridging.

“It’s an excellent way of fulling the requirements for those who it just wouldn’t be feasible to consider a short term loan, and would hopefully provide a transition into traditional bank lending a few years down the line when constraints we are currently experiencing become less prevalent in the mainstream arena,” said Lucy Barrett, Director of Vantage Finance.

Dragonfly Property Finance have already added a medium term product to their portfolio. Jonathan Samuels, CEO, explained that the product’s launch, approximately one year ago, was driven by a growing demand from borrowers looking for buy to let finance but struggling with the high street lenders.

“Whilst high street mortgages are for the long term, in reality borrowers tend to view mortgage deals with a 2-5 year time horizon hence the popularity of the 2-5 year fixed deals. Our medium term product is fixed for three years so even if the base rate moves up the borrower knows where they stand,” he said.

Yet whilst several lenders have expressed their interest in the medium term market, and a few have already launched theirs, for the majority of companies a transition would not be simple.

This is in part due to the nature of the typical funding lines which support most lenders. The monies tend to be provided at a comparatively high interest rate to the bridger and therefore profitability is dependent on high returns from the borrower - something which is much easier to demand in a short term product than in a longer one.

“Ultimately a lender will need to source or provide a different funding structure to enter a product of this nature,” said Gareth Lewis, Head of Business Development at Tiuta.

“Demand is one thing however being able to meet demand with a product that suits the potential borrower and delivers for the lender is another.”

Christian Faes added: “In the current market it seems that the decision for a short term lender to evolve into a medium term lender all depends on what their cost of funds are and how much capital they have access to.

“If you are a lender with relatively expensive capital and a smaller loan book, then you are likely to want to stay a short term lender. If you have access to relatively cheap capital and a lot of it, then a medium term offering could make sense.”

Having spoken to most of the leading names in the bridging finance sector, it seems that the only thing stopping these lenders launching a medium term product is their current funding structures. Furthermore, even those whose current funding lines would not support the products could not rule out the possibility that they may extend the length of their bridges in the near future.

Tiuta, Montello, Bridgebank, Omni and Precise are all thought to be pondering the proposition with ‘due diligence’.

Tags: Bridgebank, Dragonfly Property Finance, Montello, Vantage Finance
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Troubled subprime lender £2.8bn in debt prepares restructuring deal

October 29th, 2010

In an Interim Management Statement released on Friday, the troubled subprime lender Cattles announced that it is getting ready to cut its losses in relation to its Welcome Financial Services division.

As part of a restructuring deal, Cattles has confirmed that it would compromise its subordinated inter company claims against Welcome Financial Services Limited, and other subsidiaries in the Group, for no less than £39 million in the event of a sale to a new company.

Cattles has said it would use the £39 million payment to meet its own costs and to compromise amounts it owes to its creditors – which is expected to be around £2.8 billion, according to the last audited balance sheet date of 31 December 2008.

However, the troubled lender admitted that a number of commercial, legal and regulatory issues still need to be resolved before any restructuring can be finalised.

The group warned shareholders that it would be reporting a ‘significant loss’ for the year ended 31 December 2009, and a negative value for shareholders’ funds.

The statement said: “Cattles continues to believe that its financial creditors are likely to suffer an aggregate loss of around £1 billion. Consequently, as previously stated on a number of occasions, Cattles continues to believe that the shares have little or no value.”

Last year, shares in the lender were suspended after an accounting error revealed an £850 million black hole in the company’s finances.

When the accounting error came to light, seven former executives were dismissed, whilst nearly 600 members of staff have been made redundant.

Cattles has stopped any further lending by Welcome Finance, and is using The Lewis Group to collect out the loan book, which is predicted to take at least two or three years. So far, in the first nine months of 2010, £396.6 million has been collected.

Mortgage bridging by Masthaven

Tags: sub prime
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ASA bans controversial ad for short term loans company

October 22nd, 2010

By Shelley DeBere

A complaint made against a short-term loan company for sending out an unsolicited SMS advert has been upheld by the Advertising Standards Agency (ASA).

The company, Mason Chase, which has been trading as AdvMoney.co.uk (Mason Chase), has been accused of breaching the Committee of Advertising Practice (CAP) code on several grounds.

The complainant contacted the ASA after receiving a text message from the money lender, implying they had applied for a loan and it was ready to be deposited into their account. This was not the case.

The ASA stated that the unsolicited ad, which the complainant had already opted out of receiving from the company, ‘irresponsibly promotes credit services.’

From search engine results, it seems that Mason Chase is the umbrella title for a number of short term loan companies, such as purplepaydayloans.com and 247cashline.com.

When the ASA made attempts to contact Mason Chase they were unsuccessful, with the ad watchdog saying that this is of ‘considerable concern’ to the ASA and a breach of the CAP code, which insists that when an enquiry is made, a company should respond to it as soon as possible.

Additionally, the ASA accused Mason Chase of not keeping their databases up-to-date, another breach of the CAP code.

The ASA has now insisted that Mason Chase does not send the message out in the form it was received by the complainant, ruling that they must make sure that the recipients have consented to receiving such messages before they do so again.

Masthaven is a reputable provider of short term finance

Tags: Advertising Standards Agency, bridging loans, loan
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Consumers warned over rise in new payday lenders

October 22nd, 2010

With recent research anticipating that payday loans borrowing is set to triple in the next five years, potentially bringing new lenders in to the market place, an industry expert has warned consumers to take care when choosing their payday loan lender.

With interest headline rates up to 2,700% APR, payday loan providers are often blasted for charging extortionate rates.

However Gary Miller-Cheevers, CEO of payday lender speed-e-loans, has suggested that this figure can be deceiving as most payday loans last for a few weeks rather than a full year.

He has said: “APR for payday loans is a bit like Tesco’s pricing sausages by the ton.”

Figures from Datamonitor show that £1.2 billion was borrowed last year through payday loans, with analysts reckoning that these figures will soar to between £2.7 billion and £3.5 billion a year by 2014.

Mr. Miller-Cheevers, has warned that with new lenders coming in to the market place, all customers should be wary of whom they apply to.

“With increased competition comes choice – which is a good thing,” he said. “However, at the same time, cash-strapped consumers should very carefully look at who they’ll be doing business with.”

Research from speed-e-loans has revealed that 50% of its customers are white collar workers and professionals, including Accountants and Financial Advisers – ironically, people who traditionally take care of other people’s money for a living.

Short term loans and bridging finance