James Bloom: Now’s the time to diversify into bridging
With fewer purchases being made in what’s a sluggish housing market, bridging finance is a great opportunity for brokers to tap into this year, James Bloom, managing director of short-term lending at Masthaven Bank has argued.
Nationwide’s House Price Index found in Q1 England recorded its first annual price fall since 2012, seeing prices drop by 0.7% year-on-year. Meanwhile the bridging market has continued to grow with ASTL figures showing that last year the quantity of loans rose by 14.8% compared to the year before.
Bloom said: “We’re in a tough market with a number of mortgage lenders withdrawing from the market. When it’s more difficult to get traditional finance, people turn to alternatives and bridging comes into its own so brokers should definitely add this to their toolkit.
“I think the bridging market will be fairly resilient and having it in their toolkits gives brokers that extra opportunity to provide solutions to their clients.
“If they need finance or need to restructure their finances and they can’t get a remortgage or a buy-to-let, then bridging could be the right solution for them so now’s more important than ever for brokers to be aware of bridging finance.
“In the last five years bridging’s become much more mainstream. Part of our role as a major lender in the broker community is helping them to realise it shouldn’t be something tucked away in a drawer and brought out sometimes.
“Bridging should be one of their mainstream products they offer to clients when appropriate. I think it’s amazing brokers still aren’t aware of bridging and part of our job is to educate them.”
He went on to say that bridging is used for a variety of purposes from the classic chainbreak scenario to paying of taxes and divorce settlements, and although bridging is a relatively small market it’s growing at a fairly quick rate.
Bloom added: “Some brokers still see it as a last resort and are not as involved with it and understand it, but once they do they’ll see there’s a huge place for it in the market.”
Payam Azadi, director of brokerage Niche Advice, agreed and said years ago he became involved in bridging because his business was doing a lot of buy-to-let deals.
He said: “Doing lots of buy-to-let meant there were opportunities for us to do bridging, it was a natural progression. Going to roadshows and seminars is great, but I think more emphasis needs to be given on how you attract more bridging business. For us it was a natural evolution.
“Brokers definitely need to be thinking about diversifying into other areas like bridging, commercial and second charges, because as more homeowners aren’t selling but are looking to raise finance on their own homes or do home improvements, these products will be taken up more.
“There’s going to be less business around with the housing market subdued so you have to diversify and be in the right areas.”
Bloom said as a lender in a climate plagued by Brexit uncertainty, Masthaven is cautiously optimistic and is looking to grow sensibly.
He said: “No one knows what’ll happen and until we do, everyday there’s more uncertainty, but you have to get on with it and continue to trade and lend in that environment.
“Unfortunately, the property market doesn’t like uncertainty and when you get uncertainty people tend to sit on their hands a bit. When that happens you have to position yourself correctly so when the situation’s resolved you’re in a good place to power ahead.
“It’s a challenging time at the moment but we’re still looking at good growth this year.
“We’ve been looking at our products, revaluating everything to see how we’ve been performing and what we can do better, and when we feel the time is right we’ll launch some products over the next few months.”