Tag Archives: LTV’s

“You can’t teach experience” HFBS talk risk.

While not entirely isolated from the considerable increase in bridging competition our particularly significant USP’s have insulated us to some extent. Speaking as a lender with a significantly longer track record than most we recognise that prudent lending can often be ‘stretched’ in the pursuit of business and a softer line taken to risk. With this in mind we have adopted ever increasing rigour in ensuring that we can both meet client needs and assess risk in a way which ensures our model is long term sustainable.

As a smaller lender we have always managed business volumes carefully and they remain well within the capabilities of the existing staff structure. In respect of experience this is one of those occasions when the phrase ‘you can’t teach experience’ comes into its own. Fortunately our three key members of staff reviewing these matters have almost 100 years between them. For those not so fortunate I suspect acquiring such experience is the number one difficulty of the job.

Bridging is still a relatively new industry (certainly at anything like this scale) and individuals with our skills are thin on the ground. Whilst healthy competition is good there is always a risk that some less experienced companies may simply not price for risk, underwrite a sensible LTV, or ensure adequate exit strategies exist in order to get the ‘money out of the door’. This can give a firm a short term appearance of success, but such risks always come back to bite. In my view the single biggest risk today is the over stretching of LTV’s at the top of a property cycle.