Bridging values dip further in ‘rollercoaster year’ – ASTL

The value of bridging products sold in the three months to September decreased 17.4% on the quarter ending in June and was down 4% on the same quarter last year, according to the ASTL.

Despite this, the value of all loans written by the organisation’s members in the year to September was up 15% on the previous year, it said.

The value of bridging applications also declined quarter on quarter, after surging 61.5% between Q1 and Q2. Applications totalling £3.3bn were processed in Q3. However, the figure was not indicative of future completions, which would be lower because consumers tended to shop-around, the trade body said.

By comparison, ASTL members wrote approximately £2.85bn of bridging loans in the year to June, which was up 5% on the £2.7bn written in the year to March.

ASTL represents 36 short-term and bridging lenders across the UK. Its chief executive Benson Hersch (pictured) said the sector had experienced a volatile year, akin to a “rollercoaster ride” with loan values rising and dropping alternately.

He said: “Anecdotal feedback from members in respect of Q4 remains positive, but whilst many are positive about their firm’s performance, the market is definitely showing signs of becoming more difficult. I therefore think that we will end the year well up on last year’s total of £2.4bn loans written, but we are unlikely to make the £3bn that many were predicting last year.”

Bridging has been impacted by a number of legislative changes throughout the year including the rush to complete deals in Q1 to beat the Mortgage Credit Directive and Stamp Duty changes, followed by a cooling period thereafter, and later Brexit.

Hersch had cautiously expected the rush for applications witnessed in the second quarter to translate into “healthy completions in the post-referendum period”.

However, he later conceded: “This was the first full quarter after the referendum. Brexit blues, increased stamp duties and impending tax changes all seem to have had an effect.”

He said: “My doubts regarding the record level of applications in the June quarter being reflected in completions in the September quarter proved correct and I predict the same for the forthcoming quarter.”

He added: “Bridging figures have been on something of a rollercoaster ride over the past year, having risen and then dropped, however the size of the total loan book is still well up on the previous year.”