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Bridging lending lifts as exit strategies shift – West One

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  • 15/08/2019
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Bridging lending lifts as exit strategies shift – West One
Gross annual bridging lending increased to £5.6bn at the end of the second quarter of 2019, a modest increase on the previous quarter and the third highest on record.

 

The data from the West One Loans Bridging Index showed that these top three peaks in annual lending all occurred in the last four quarters. 

It added that the sector had benefited from “increasing professionalism” from both lenders and borrowers in recent years, helping the market to perform “strongly”. 

It suggested this was due to property market volatility, seeing bridging as “opportunity” finance and lenders meeting the demands of professional borrowers.

In Q2, the provisional seasonally adjusted UK property transaction count for June 2019 was 84,490, the lowest number in the last 12 months. This equates to a decrease of 9.6 per cent between May 2019 and June 2019 and is 16.5 per cent lower than June 2018. 

Stephen Wasserman, managing director of West One Loans said the lender enjoyed a strong first half of the year, as it completed some of its largest loans.  

“Q2 started incredibly well for us as we were able to deliver two record months EBITDA for the lending business in April and May. This has been backed up by strong enquiry levels throughout the quarter, which were higher than we anticipated at the beginning of the year. 

“I’m also glad to see it’s not been a ‘race to the bottom’ with rates, seeing a slight increase to 0.95 per cent against the average rate of 0.94 per cent in Q2.” 

 

Refinancing shift 

The data showed that when it came to exit strategies, clients were increasingly shifting from property sales to refinancing. 

For the first half of 2018, 51.7 per cent of loan exits were the transfer of debt into a different form of finance. Over the same period in 2019, this rose to 59.1 per cent, while property sale dropped from 28.5 per cent to 26.2 per cent. 

West One Loans said it had seen an increasing number of borrowers hold on to property and add it to their portfolio, possibly due to the difficulty of making a sale or doing so at their desired price. The company also said the number of landlords with between six and 20 properties “was rising while those with between three and five are falling”. 

According to the lender, this was fueling an increase in bridge-to-let mortgages onto a buy-to-let mortgage. 

Francesca Carlesi, founder and CEO of Molo Finance, added: “There is clear evidence from this and other recent reports that the buy-to-let market and other lending remains resilient, despite predictions and market headwinds.”

 

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