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Bridging market: Six predictions for 2018

The bridging market enjoyed a solid performance last year, after achieving gross annual lending of £4.7bn in Q3 2017, according to a recent study.

The West One Bridging Index report found that gross annualised lending increased from £4.3bn in June to exceed the peak of 2016’s pre-EU referendum high of £4.4bn, with the figure up 10% on the same period in 2016.

What do we expect to see from the bridging market in 2018?

Richard Tugwell, director at Together, said: “The Intermediary Mortgage Lenders Association (IMLA) described in its October white paper a ‘rebirth’ for the specialist lending market, following its impressive growth, particularly in the bridging finance sector.

“We fully expect this situation to continue throughout 2018, as high street finance providers shuffle their propositions, meaning an even greater number of borrowers will be unable to access the short-term funding they need.

“This growing demand will provide greater opportunities for specialist lenders like Together to highlight a more tailored service – relying on personal decisions, rather than a computerised approach – to deliver the best outcome for the customer.

“In 2018, we will be forging even stronger relationships with brokers so that – as rates start to move and customers’ deals come to an end – we will be able to help even more who are looking for bridging finance, but who may not fit mainstream criteria.”

Paresh Raja, CEO at Market Financial Solutions, believed that 2018 represented a significant opportunity for bridging to further establish itself as an attractive funding option.

“As clarification is obtained as to what Brexit will mean for the UK, it is foreseeable that greater confidence will return to investors.

“Subsequently, as 2018 progresses, the housing industry could once again return to more substantial patterns of growth, which may spark a rise in real estate investment [and], therefore, bridging demand.

“Apart from the South East and London areas, demand for bridging will also rise in other cities such as Manchester, Liverpool, Leeds and Birmingham, which continued to perform extremely well in 2017 and property investors will continue to tap into this sustainable growth.”

Gavin Diamond, commercial director of bridging at United Trust Bank (UTB), added: “The bridging market continues to go from strength to strength, with UTB seeing a record number of cases in 2017.

“2018 is already off to a busy start and there’s nothing to suggest there will be any let up in activity in the short-to-medium term at least.”

Jonathan Sealey, CEO at Hope Capital, believed that flexibility would be key for bridging this year and there was no room in the market for the ‘one-size-fits-all’ approach.

“Lenders need to be flexible and treat every borrower in accordance with their individual needs.

“The prospects for lenders from developers seeking finance will increase as the government moves on its plans to get the country building.

“The land that has been sitting waiting for development will have to [be] built upon, which means developers may need funding sooner than they might have initially thought.

“Short-term finance could come into its own to give developers room to move from one project to another.

“We saw an increase in applications at the end of 2017 for loans for renovation and refurbishment.

“This is a trend that I can see continuing this year as more people – especially landlords – look to improve their current position and increase the value of their existing properties.”

Narinder Khattoare, CEO at Kuflink Bridging, commented: “The bridging market is coming off a hugely successful 2017 and pipeline business going into January is the best that we at Kuflink have ever seen.

“Certainly, industry figures from a variety of sources show the continuing growth of the sector and I expect that trend to continue in 2018.

“Development and refurbishment loans will be growth areas this year and with the news in the cabinet reshuffle that housing – and by extension the property market – is now represented at cabinet level, I am confident that the chancellor’s plan to make housebuilding a priority will actually bear fruit.

“This can only lead to greater opportunities for advisers with clients associated with the building trade over the next few years.”

Allegra Penny, relationship manager at Funding 365, also expected the bridging market to continue its growth in 2018.

“I predict continued growth in investment outside of London as stamp duty continues to bite, but I would imagine this would be at a slow rate.

“Now we have moved into the second phase of Brexit, there is still much uncertainty and until we know more, this will continue to have an adverse impact on the property market.

“Finally, moving into 2018, I think we will see continued innovation and competitive offerings within the industry and at Funding 365.”

Source: Bridging and Commercial