The rate of change in the short-term lending market since March has been immense, but one of the great things about our sector is that it is possibly the most resilient and adaptable area secured lending.

Lenders have been incredibly quick to respond to the changing environment and evolve their processes accordingly and while some lenders have pulled back from the market, many have continued to lend throughout lockdown, using technology and remote valuations to continue to operate effectively. They are, rightly, taking appropriate precautions to mitigate risk, and we have seen a tightening of some criteria, such as limiting LTVs, reduced appetite for larger loan sizes and taking a more cautious approach to ground-up developments.

We currently find ourselves in a situation where levels of activity are extremely high but caution ultimately still reigns, which is the correct approach for a number of reasons.

The removal of the furlough scheme in the coming months is expected to lead to a spike in unemployment that will put further downward pressure on the economy and questions remain as to the potential shape of any recovery.

While the furlough scheme has been welcomed by lenders, another piece of government intervention has provided them with significant logistical considerations and placed a disproportionate financial strain on short-term lenders. The current enforcement moratorium, which suspends recovery activity for lenders was introduced with the best intentions of keeping people in their homes during the pandemic. But it has been applied with a broad approach and it has been clear to us at the ASTL that there is a need for far more detailed provision in the mortgage market. We are already seeing consumer detriment and there have been examples of peer-to-peer lenders calling in their loans at short notice as they are unable to address the mismatch between funding and lending requirements during this period when their powers of recovery have been stifled.

We have sought to encourage HM Treasury to recognise that the market is made up of many products, not just traditional long-term owner-occupier residential mortgages and we have offered our help as part of a balanced response that best supports the UK’s economic recovery. And I am happy to say that we have made some progress in speaking to the right people and we will continue to push for greater engagement, both on this issue but also any future issues where it would be beneficial to include the insights and ideas of the short-term lending market.

The market is performing well and while there may be some challenges on the horizon, where there is demand from customers and an appetite to meet that demand, there will always be the ingredients for a healthy market. At the ASTL, we are receiving substantial levels of interest from potential new members and associate members as we continue the process to grow our membership and influence, and we will do all we can to help deliver that healthy market.

Vic Jannels, CEO of the ASTL

A version of this article appeared in the July digital edition of Business Moneyfacts