At the Association of Short Term Lenders (ASTL) conference earlier this month the regulator outlined its findings on typical bridging borrowers from the regulated market date it receives.
- Bridging is much more concentrated in London and the South East – around 40% of loans are in these regions compared to 26% for standard mortgage lending;
- Significantly less bridging lending takes place in the north of England, Scotland, Wales and Northern Ireland;
- Median bridging loan value is around £208,000, compared to £143,000 for a standard mortgage;
- Median property value is significantly higher at around £550,000 compared with a normal mortgaged property value of £230,000;
- Significantly more bridging loans are on detached houses – 51% compared with 23%;
- Average bridging customer age is 56, compared to 37 for a normal mortgage;
- Bridging customers are more likely to be self-employed – 31% vs 11%;
- Bridging customers are also significantly more likely to be retired at 28% vs 1% standard mortgage customers.
However, industry experts say while they welcome the finding that very few borrowers are in debt or seeking a last resort, they disagree with some of the other conclusions, particularly surrounding location and age.
Vic Jannells (pictured), chairman at All Types of Mortgages, says: “We are conducting bridging loans throughout the UK, mainly in the more wealthy markets surrounding the larger cities or where applicants are purchasing run down or repossessed properties to upgrade and sell on.
“There are a percentage of customers who are retired but there are a large volume of entrepreneurial applicants in the mid 30’s upwards who are building property development and management businesses.”
John Hardman, head of sales at Bridging Finance Solutions adds that while historically London and the South East has always been more active with regards to developing, buying and selling residential property, that is now changing.
“The Midlands through to the North of England continue to see growth in the short term market both in numbers and volume as investors continue to look for maximum yield combined with capital growth, two elements that are starting to come under some pressure in certain areas in the South,” he says.
On the subject of employment he adds: “We are seeing more and more employed or retired clients who have taken the time to research this market via the internet, trade press or DIY programmes on TV. They see that this is not as complicated as is sometimes made out and decide to have a go themselves.”