I'm in a somewhat reflective mood, given Aldermore has just turned five. It's making me consider how far the market has come since 2009 when we opened our doors for business.
<
div>I’m in a somewhat reflective mood given Aldermore has just turned five. It’s making me consider how far the market has come since 2009 when we opened our doors for business.
Five years ago, it was not a good time to be in finance, let alone to launch a bank offering commercial mortgage lending, among other services. We were in the depths of the biggest financial crisis in recent history and the bottom had fallen out of the commercial lending market. The UK economy had shrunk by 2.5 per cent in Q1 2009 marking the worst single quarter drop since the Second World War. In fact, UK GDP fell by 5.2 per cent over 2009 as a whole according to ONS figures. It was a very uncertain market where mainstream commercial mortgage lenders had exited the market and all other lenders were retrenched in some way.
Aldermore was one of the only commercial mortgage lenders willing to do business when we entered the market in 2009, which was a brave move on the part of our founders, who created the Bank’s commercial mortgage business from the merger between Base Commercial Mortgages and Ruffler Bank.
So we caused a bit of a stir when we entered the market. Our entry was probably the first sign of positivity in the commercial mortgage market for a good 10 months or so since the crisis had first hit. In fact, the reaction from many brokers was one of jubilation as their clients were crying out for finance. While we had strict lending criteria and have always been focused on responsible lending, we got off to a flying start as brokers clamored to be on our panel.
Since then, the economy and the commercial lending market has gone from strength to strength and this has been reflected in Aldermore’s growth. In April 2012, Aldermore launched Keystone Buy to Let mortgages in a joint venture with Mortgages for Business. The Keystone product set caters for the needs of professional landlords with complex Buy to Let propositions (i.e. limited company borrowing vehicles, Small HMO’s & multi-unit titles) and provides them with an effective solution to meet their mortgage needs. By the end of February 2014 we had advanced in excess of £100 million on the Keystone product set and to date have completed more than 800 Keystone transactions.
We also entered the property development finance market in January 2012 after seeing the house-building market spark back to life, having been in hibernation for a couple of years. Our main customers are SME house builders who have a good track record in the PD space and many of these firms were struggling to get finance at the time. This presented itself as a good opportunity to provide much needed support.
The property development market really took off and over the past six months we have doubled the size of the PD team, to reflect our appetite in this sector. The house-building market is seeing a shift outside of London into second cities which is good news for the wider economy, and Aldermore is proactive in supporting developments outside the South East. I would expect this trend to continue going forward and the availability of funding increase. I would also hope that planning laws will relax further to allow more developments.
While the past five years have been tough for many people, we are certainly on the up and have weathered the storm along with our customers. It will be interesting to see what the next five years will bring.
Attributed to Rob Lankey, Managing Director, Commercial Mortgages, Aldermore
Leave a comment