Commercial mortgage sector looks robust to Charterhouse Research

It's not all doom and gloom in the property market with 73% of brokers operating in the commercial mortgage market anticipating growth in their business over the next year.

Charterhouse Research's annual industry survey, conducted among commercial mortgage brokers, seeks intermediaries' opinion on a range of topical market issues and asks them to rate products and services from commercial mortgage lenders.

'The UK commercial mortgage market has repeatedly been highlighted as an area of potential growth for intermediaries in recent years and the results from our in-depth research support this,' said Mark Dennis, director of Charterhouse Researc. 'There are real opportunities for lenders and intermediaries over the next 12 months.'

The survey also revealed that significantly, commercial mortgage intermediaries have used a limited range of lenders over the past year. On average, intermediaries have placed business with just five lenders over the course of the year – much lower than residential mortgage introducers who typically used 11 lenders each quarter.

Specialist commercial intermediaries, for whom over 50% of business income is derived from commercial mortgages, use an average of seven lenders. Non-specialist intermediaries use an average of four lenders.

The majority of brokers place nearly half of their commercial mortgage business (45%) through one lender, with a further 20% going to their number two lender. This highlights how important it is for lenders to achieve either top or second lender status. Mortgage lenders will have to decide whether to maximise the number of brokers they work with or focus on securing the majority of their business via a small base of supporting intermediaries.

Demand for online servicing in the commercial market is growing, according to the research. Almost a quarter (24%) of commercial mortgage intermediaries are currently using multi-functional online platforms compared with 100% of residential mortgage intermediaries.

Commercial mortgages are sometimes seen as too complex for the online process, but there is demand for better online functionality to support the commercial mortgage application. 40% of mortgage intermediaries consider the availability of online servicing when deciding which lenders to approach on a case.

‘As the intermediary channel becomes ever more important, lenders need to consider how they service intermediaries,’ Dennis warned. ‘A good, trust-based relationship is fundamental to determining which lender achieves critical ‘top lender’ status. In a market where cases are often complex, a key contact to liaise with and regular proactive communication with intermediaries is of paramount importance.’