The Bridging Sector is Growing
The growth in prominence of the bridging sector is evident, and looking at the current state of the property market it’s not difficult to see why. As house prices remain high, supply of affordable housing low and lingering affordability issues surrounding the MMR, it’s evident that the challenges facing first-time buyers remain insurmountable for many. In addition, greater numbers of the younger generation are both attending university and staying in higher education for longer. This combination of factors, amongst others, means that rental demand carries on illustrating enviable strength. And with strength comes opportunity, especially for landlords and investors with access to the right types of funding. Exactly where bridging finance really comes to the fore.
This is illustrated in the recently released quarterly figures from the Association of Short Term Lenders (ASTL) which showed a significant jump in bridging completions. The data suggests that there has been an 83 per cent increase in the number of applications in the first quarter of 2014 compared to Q4 2013. In addition the number of short term loans written in Q1 2014 was said to have risen by 35.4 per cent compared to the first quarter in 2013.
Additional figures reported in West One Loans’ latest survey reveal that property refurbishment-focused finance has doubled in the past 12 months. The Broker Sentiment Survey suggests that £1.29 billion has been lent for property refurbishments and conversions in the past 12 months, double the amount in the year leading to April 2013. The annual survey found that there were 2,800 separate projects over the last year, resulting in loans for all forms of property improvement now representing 61 per cent of total industry gross bridging lending. And a further positive statistic was the fact that 57 per cent of brokers were said to be expecting growth in lending for property refurbishment and conversion.
As suggested the opportunities for lending on projects such as these are likely to increase over the coming months, and brokers who are able to identify such opportunities and understand the benefits attached to these types of loan will be best placed to capitalise from such situations.
It’s clear that consumer confidence is on the rise and this has certainly filtered down to a raft of providers looking to bolster their individual propositions within the specialist lending arena. As more and more lenders enter, and expand their offering within the bridging market, this will inevitably result in further competition which will work to increase the clarity, quality, choice and availability of the products on offer. All of which represents good news for brokers looking to add an even stronger array of bridging options to their portfolio and additional flexibility to meet a range of clients needs.