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Bridging lender pullback will shape new landscape – Jonathan Sealey

by: Jonathan Sealey, CEO, Hope Capital
  • 30/08/2016
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Bridging lender pullback will shape new landscape – Jonathan Sealey
Contradicting messages flood the bridging market about how well or how badly it is faring in light of the UK's decision to leave the European Union. Jonathan Sealey, CEO of Hope Capital, takes a closer look to uncover the realities of bridging and Brexit.

There has been much talk about how well the bridging market is actually doing and in which part of the country while the odd big name has pulled back, but there still appears to be more lenders coming into the market than leaving it.

This was borne out recently by quarterly data figures from the Association of Short Term Lenders (ASTL) which showed that the value of applications for bridging loans went up by an incredible 61.5%. While some of that may be down to brokers shopping around, completions were also up and more of this should be reflected in the quarter to come.

During my year on the executive committee of the ASTL, there has also been an increase in the number of lenders looking for membership of the ASTL, clearly demonstrating a growing interest in the short-term lending sector.

There has been much talk that some of the larger bridging lenders are struggling a little as outside investors become nervous and pull back on their credit lines. If this is true it is not good for the larger lender but it has been nothing but positive for smaller lenders with their own funding.

At Hope Capital we have seen a significant uplift in demand for loans since the referendum, some of which is undoubtedly coming from brokers who are now looking at new avenues for their clients, as the lenders they are used to dealing with can no longer meet their clients’ needs.

We have also seen a slight shift in the geographic uptake of bridging loans with far more demand and uptake in our heartland of the north and the midlands and away from the south east, where previously we had an ever increasing demand for bridging and short-term loans in and around London.

The use of bridging is still predominantly the same, however. Developers and property investors are refurbishing a property or changing its use in order to let or sell.

It is clear that there is some turbulence behind the scenes in some parts of the bridging industry, as I am sure there are in other parts of the specialist finance market too. However, demand continues to rise.

At the moment at least, developers and investors seem to be buying properties in the same numbers that they were previously, although their investments seem increasingly to be outside of London. While the demand for loans is there, they will continue to be serviced, but increasingly this will be by the true principle lenders with their own funds rather than by those reliant on external credit committees.

If this continues it may well result in a bridging industry that looks somewhat different in a couple of years to the one that we see at the moment.

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