Bridging finance unrecognizable from a decade ago
Barney Iles is lending manager at Blend Network
The bridging finance market is now unrecognizable from the sleepy market it was until a decade ago. A wave of tech-powered, regulated and innovative lenders had disrupted the market well before COVID-19 hit while last year’s pandemic and the subsequent booming property market have proven to be the moment bridging finance was made for.
The development and bridging finance sectors have evolved vastly over the past decade or so with both the product and the lending landscape changing to serve a more diverse, informed, connected and demanding range of customers than ever before.
Digging a little into history, we find that bridging finance has its roots in the 1960s when it was offered mainly by the high street banks and almost exclusively for house purchases only.
The ‘bridge’ between a house purchase and a delayed house sale was seen as something of a last resort for many people. However, bridging finance is now often the funding of choice for sophisticated borrowers and professional property developers who are, for instance, looking to secure a land purchase while they obtain planning for its development or want to carry our light refurb on a property.
With greater choice, lower prices and technology bandwidth making the process faster, easier and much more efficient, these are exciting times for everyone involved in this vibrant and fast-moving industry – property developers, property investors, lenders and brokers alike.
Yet greater choice also requires a better understanding of what different bridging lenders are offering. Now, more than ever before, it is important for users of bridging finance to be informed and aware of what is available in the market and how each offering can best meet their needs.
This is important because despite its growth and evolution over the past few years, the development finance and bridging finance market remains notoriously fragmented, and even worst, hugely unregulated. Indeed, according to the Association of Short Term Lenders (ASTL), regulated bridging loans account for around 13% of the market.
Yet the good news is that the market is fast evolving with the arrival of a new wave of tech-powered, regulated and innovative bridging finance lenders who are using technology to institutionalize the market, disrupt it and bring much-needed transparency into an otherwise opaque market.
The use of technology has transformed the real estate industry, especially the development and bridging finance sectors, with most lenders having developed portals for brokers and/or customers which help to streamline the application process and underwriting through to completion.
Technology has also helped institutionalize a market otherwise dominated by a large number of small, traditional players with one foot still in the 1960s.
There is, of course, an ongoing debate around whether the overuse of technology can be more of a hindrance than a help, but the answer is probably a mix of old and new (best of the old, best of the new) whereby technology can be used to complement and enhance human rather than replace it.
Amid this fast-evolving landscape, Blend Network has become known as the tech-powered specialist lender which deals with everything from the everyday vanilla deal to the off-the-shelf quirky deal.
Employing technology to speed things along while also offering good old-fashioned human interaction sits at the center of how we serve borrowers.
This formula has proved to work handsomely among borrowers keen to get things done with a touch of human interaction and powered by all the efficiencies technology has to offer.