I should warn all readers that I’m someone who is anti-Facebook, has never used Twitter and only rather recently learnt what a blog is, but hopefully my thoughts and musings on the bridging market will be of some interest.
It is a marker for how bad things are or may be with regard to the global economy that I am now most mornings picking up a copy of City A.M. at East Finchley underground station on the way to work.
Up until recently it has been possible for those of us in the bridging sector to keep our noses firmly in the bridging bubble. Lots of activity, even if (keeping up the bubble theme) certain figures may be inflated, certainly many new lenders and undeniably an air of confidence reflected in the increasing membership of the astl; the formation of the AOBP; the attendance of so many bridging lenders at the summer NACFB exhibition and doubtless the over representation of bridging lenders at the forthcoming Mortgage EXPO in November to name just a few indicators.
So why the need to poke one’s nose above the bridging parapet and gaze at the rollercoaster stock market, Greek riots and endless European meetings on the Euro if everything in the bridging sector is so rosy?
A couple of main reasons really. I don’t know if the saying attributed to JP Morgan that he knew it was time to get out of the stock market after receiving tips from his shoe shine boy is true, but it springs to mind that given the number of new entrants into the sector. For a more literary analogy;”no man is an island”. Well, whatever one thinks, there is no way that the bridging sector will not be affected by what is going on in the wider economy. It already is.
In fact both the buoyancy of the sector in terms of activity and the inrush of new lenders are both a direct result of the problems in the wider economy. Many of the borrowers that we see at UTB are high quality, asset rich individuals seeking a short term bridging facility precisely because of the difficulty in accessing credit from the larger institutions. That’s not to say that most of our borrowers are financial refugees; far from it. Our department provides a personalised bespoke service that many larger institutions would struggle to replicate even in times of easier credit availability, but it is true that many of these people no longer have the option of the larger lenders.
Additionally, bridging is attracting interest from funds and investors in many guises as it is seen as producing a higher return than many other fixed investments. This is combined with the reassurance that cases are individually underwritten and that the money is secured on a property. Furthermore, bridging loans do not carry the risks associated with investing in the stock market and so it is fair to assume that while wider economic turmoil and uncertainly exists and bridging lenders continue to focus on the quality of loans the sector will continue to thrive.