Bridging continues to thrive

The lending landscape looks very different nearly 10 years on from the Credit Crunch. The largest High Street Banks have exited from or reduced certain types of lending and ‘challenger’ and specialist banks such as United Trust Bank have emerged as ever more significant participants. In this new environment, short term bridging lending continues to thrive with a plethora of different lenders each with their own funding structures and appetites.

According to the ASTL’s most recent figures, the growth of the bridging market remains healthy. The value of loans written in the first quarter of this year is 26% higher than the first quarter of 2015 and the volume of applications also increased by 7.6% when comparing Q1 2015 to Q1 2016. Interestingly, conversions have improved considerably over the last few years as well.
The percentage of written business to applications received increased from 18% in 2010 to 32% by March of this year. Brokers may be choosing their cases more carefully, but I expect there’s now more variety and flexibility amongst lenders enabling more borderline cases be placed.

The reasons for bridging loans remain extremely varied and customers’ stories can also be complex. As each person’s fingerprints are unique, so too are their situations and a good bridging broker or lender offers experienced people who have the time to discuss and understand a case before structuring a suitably tailored solution.

Why has the sector shown such strong growth? A buoyant property market, a recovering economy and growing awareness of the versatility of the product have provided an environment in which bridging finance has been able to further push out of the ‘classic bridge’ pigeon hole it was once confined to. Greater regulation has been accompanied by a significant improvement in reputation and general standards and we’ve seen a mushrooming of the number of lenders and great variety in their modus operandi. Service, flexibility and relationships are still at the core of UTB’s and most other successful lenders’ bridging propositions.

As the choice of lenders increases, so in our view, does the importance of brokers and professional advisers who can guide their clients through a myriad of options. A strong understanding of lenders’ offerings and strengths is therefore crucial and lenders have a significant role to play in ensuring that brokers remain well informed.
Alan Margolis, Director (Legal) Mortgages and Bridging