Bridging in 2018
Jonathan Sealey (pictured) is chief executive of Hope Capital
The latest data from bridging trends certainly made for interesting reading.
Mortgage delays were cited as the most popular reason for obtaining a bridging loan in Q3 this year, while average LTVs reached 49.6% during Q3 this year.
This was up from 45.4% on the previous quarter, suggesting that investor confidence in the market is stable and on a steady upward trajectory.
The fact that the average completion time on a bridging loan application in Q3 increased by four days isn’t surprising.
The summer holiday period is typically a busy time for annual leave requests and resource levels dropped as a result.
Perhaps some lenders need to think about streaming completion processes further in order to really make the most of the opportunities in the market.
Luckily, bridging finance is built on the very foundations of flexibility and speed.
Although mortgage delays have returned as the main reason for obtaining bridging finance, refurbishment follows closely behind, highlighting how it is still a key area of demand, as more people realise the opportunity that it offers.
Since the change in planning legislation a few years ago, the purposes for a refurbishment are extensive, and bridging can be the flexible solution that enables it to happen.
We have also seen an increase in applications involving renovation and refurbishment and this trend is likely to continue in 2018.
These industry figures also illustrate how a one size fits all approach and offering is a thing of the past.
Bespoke and flexible financing is the future, particularly during times of uncertainty, so it is crucial that we as an industry are fully prepared with diverse financing options.
Market moves are continuing to present the bridging market with opportunities and we must continue to capitalise on these going forwards.
The fact that the drop which followed the referendum quickly recovered highlights the market’s resilience and reiterates how it is well placed to take advantage of any future economic fluctuations due to its adaptable nature and diverse offering.
The sector has seen a five-fold growth in lending since 2011, and the low interest rate environment means an increasing number of borrowers will turn to alternative funding options.
Well-funded players in the market, particularly principal lenders who are able to cater for complex cases and can provide quick turnarounds, will ultimately thrive.