You are here: Home - Specialist Lending - Bridging -

Hersch: Where is the bridging market going?

by: Benson Hersch, CEO of the Association of Short Term Lenders
  • 14/09/2017
  • 0
Hersch: Where is the bridging market going?
In these uncertain times only established, well-run firms are likely to weather the storm, says Benson Hersch, chief executive of the Association of Short Term Lenders (ASTL).

The latest figures from the ASTL’s quarterly review indicate that members are still experiencing strong growth, both in enquiries and completions.

The annual figure of £3bn has finally been breached. This validates the confidence shown in our sentiment survey earlier this year, which revealed, 70% of respondents expected the volume of their own business to grow.

In the same confidence survey, only 59 % expected the total bridging market to grow, with 12% expecting it to shrink. Confidence in the long term growth of the UK economy as a whole was even lower, with only 43% expecting positive results.

What is underlying these figures?  Well, it seems that some smaller lenders are exiting the bridging market as lower pricing makes the risk-reward level less enticing, particularly in the current more problematic property market. Also, brokers are increasingly aware of the growing professionalism of established businesses, who offer transparency and certainty as well as lower pricing.

In addition, many smaller “under the radar” lenders are not sufficiently au fait with the current regulatory and prudential climate.    This may not affect their ability to make loans, but will certainly impact on the likelihood of exiting via refinance with mainstream lenders.   The financial effect of these restrictions is growing.   Allied with mainstream lenders’ concerns about long-term trends, the level of government and personal debt has reached frightening heights.

Public finances are in a mess.  Spending has increased every year in the past 30 years (despite “austerity”); National debt has doubled in the past seven years.   Brexit has caused this problem to become even worse.   

So, in these dangerous times, although the threat of increasing interest rates has receded for the moment, it’s really only established well-run firms that are likely to weather the storm.

Although barriers to entry to the short-term property lending market are low, new entrants are hampered by the shortage of experienced and competent underwriters, as well as the strength of relationships.   Interestingly, a broker recently told me that he would be loath to approach new lenders unless they fell into the category “new lender, old team”, as delivery and competence were more important than price.  Lenders need to bear this in mind when reacting to competition, especially by increasing LTVs.   

 

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Bridging

Keep up-to-date with all the breaking bridging and short-term lending news and analysis, from regulatory changes to product innovation and inside market knowledge. Take a look at our broker and lender case studies showing short-term finance in practice.

Commercial

Find all the news, opinion and analysis for property finance brokers specialising in commercial and semi-commercial mortgages, alternative and development finance for commercial investments in residential projects.

Second charge

Stay up-to-date with the latest news, analysis and opinion on the secured loan market as it evolves into a mainstream finance option following European regulation on 21 March 2016.

Complex buy-to-let

Whether it’s a complicated asset or a complex customer, you’ll find out all the breaking buy-to-let news in this section. From limited companies to portfolio landlords, student lets to a House in Multiple Occupation, we’ve got all bases covered with our up-to-the-minute news, analysis and opinion.

Mortgage Solutions

Find all the breaking news, analysis and industry comment on Specialist Lending Solutions' sister site, Mortgage Solutions
Read previous post:
Gavin Diamond UTB 271016
Case study: Financing a commercial to resi conversion

United Trust Bank and developer Regents Bay discuss how a property improvement loan funded the successful conversion of redundant office...

Close