Chat to a team member

CORONAVIRUS: The health and safety of our customers and partners is our priority UPDATE

Blog

Adapting to change and thriving in uncertainty

Jonathan Samuels Jonathan Samuels
Posted on Jul 03, 2017 | in Blog

There’s a lot of uncertainty out there at the moment. Politically, we’ve got a leader who is arguably in office but not power, and an opposition leader who would surely introduce all kinds of problems for UK plc.

There’s also the small matter of Brexit — hard, soft or or medium-rare — and a Government without a mandate trying to negotiate it.

Economically, there’s a huge amount of uncertainty, too. Again, the impact of Brexit is the biggy, but there are a lot of mixed messages emerging from the Monetary Policy Committee on the direction of interest rates, an issue that is becoming ever more pressing given the sharp growth in inflation.

The Bank may not want to act, but if inflation continues on its current trajectory, eroding people’s disposable incomes, it could be forced to act.

And closer to home, the housing market as a whole is slowing up. Prices, most agree, are only being propped up by ridiculously low supply and the lack of properties available for sale.

And while I don’t agree with claims by an academic over the weekend that there will be a significant correction in house prices, it’s hard to deny the market is in a soft patch.

The Bank of England, as revealed in its latest Financial Stability Report, is also worried about the rise in consumer credit. With interest rates on loans and credit facilities so low, households have been borrowing like it’s going out of fashion.

Sadly, the one thing that doesn’t go out of fashion is people being required to pay the loans they take out back. And that, Carney and the MPC crew at the Bank reckon, could be a growing problem, all the more so if rates rise.

Alongside the potential for rate rises, many lenders are also having to operate under strict new stress-testing and affordability rules. And with potentially more stringent criteria to come, there’s even more uncertainty facing borrowers and brokers. Risk has rarely been under such intense scrutiny.

In short, it’s a testing and increasingly tumultuous environment. But I’m not worried. When I launched my first specialist lender, Dragonfly Property Finance, back in 2009, things were far worse than they are at present.

Far worse. After all, for a period of time the whole global financial system was under threat. But against this bleakest of backdrops, the UK’s property finance market adapted and evolved.

New lenders emerged that would not just box tick but look at applications on merit, and actually seek to understand them. While many traditional lenders headed for the hills, others saw an opportunity and got stuck in.

As concerns about risk rise today, the number of lenders that can actually understand it, and are able to operate in a less predictable and stable environment, will also rise.

That’s because if we learnt one thing from the Global Financial Crisis, it’s that lending and business models will evolve. Our own risk-based approach to lending is hopefully an example of that.

So however grim the outlook, however high the level of political and economic uncertainty, there will still be a market. For many in the property industry, lenders and borrowers alike, the end is really just another beginning.

More in this section

Mark Posniak

Four years old, flat out and having fun

Feb 24, 2021 | Blog

I can’t believe that this week we celebrated our fourth birthday,…

Mark Posniak
Mark
READ MORE

Specialist lending flies over the cuckoo’s nest

Feb 11, 2021 | Blog

If the closing stages of 2020 were crazy, the start to 2021 has…

Mark Posniak
Mark
READ MORE

Redemptions milestone amid pandemic my proudest moment yet

Jan 15, 2021 | Blog

Over the years the team here at Octane has achieved many great…

Matt Smith
Matt
READ MORE
Sections
Archive
Twitter
Follow us @octanecapital

13 hours, 19 minutes ago
Woo Hoo!! Thank you so much to all who voted for us! We are so #Proud & #Humbled to have won the Best Service Awar… https://t.co/esBibtDpKU

16 hours, 41 minutes ago
We are absolutely delighted to announce that we have today opened up our Octane Capital Ltd #3rdGen #BuyToLet produ… https://t.co/CBLrW4xl2h

1 day, 7 hours ago
End of a great day out with great Octane Capital Ltd #3rdgen #Partners #workhardplayhard https://t.co/OsapyXloVc

2 days, 9 hours ago
What a great example of how a specialist #BTL loan can help you and your clients when the high street lets you down… https://t.co/BU9VlEkHnV

2 days, 16 hours ago
What a great piece of marketing and class from Tesco Pretty sure that plenty in my network will be looking to obl… https://t.co/vrUH89DjbH

3 days, 13 hours ago
Can't wait for tomorrow morning and the joint #Eductaion session with David Coleman from Positive Lending for all t… https://t.co/kAztpMDYvF