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Bridging will be vital to navigate roadblocks before stamp duty deadline – Jannels

by: Dale Jannels, managing director at Impact Specialist Finance
  • 15/10/2020
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Bridging will be vital to navigate roadblocks before stamp duty deadline – Jannels
As we saw in the latest figures from the Association of Short-Term Lenders (ASTL), unsurprisingly the momentum from Q1 was temporarily halted in Q2.


Of course, the rapid decline in completions was not restricted to this particular sector and was felt across the UK as the housing market effectively shut down.

Bridging completions were recorded at £470m in Q2 2020, a fall of 56 per cent when compared to Q4 2019 figure – Q1 figures were not reported because of the lockdown.

The data also showed that applications increased by just over one per cent in Q2 compared to Q4 2019, while loan books showed a small decrease but remained at £4.5bn.

Average loan to values (LTVs) increased slightly in the same time period, but continue to remain at sub-60 per cent.

However, on a more positive note, it was encouraging to see recent reports that Hope Capital noted a record surge in demand between June 2020 and August 2020.

The lender saw its number of loans drawn treble compared to the same period the previous year. Looking at new cases, the quantity more than doubled over the same timeframe, rising by 128 per cent, and residential completions increased by 40 per cent.

The second half of Q2 certainly represented a transitional period for many links in the mortgage chain.

Transactions which had been delayed over the lockdown period were slowly resurrected and stamp duty changes ramped up activity levels towards the end of this period.

This meant Q3 kicked off with a real bang as pent-up demand surged through the market to generate what we can only class as a mini-boom.


Housebuying delays likely to continue

This has resulted in all types of property going under offer faster than they have for many, many years.

And all of this is happening while surveyors, conveyancers and lenders were, and in some respects still are, getting to grips with new working conditions and backlogs across a variety of transactions.

On the back of this, we are seeing reports emerging of property exchanges taking a month longer.

This is certainly not far from the mark, and these delays are only likely to be further extended as increased amounts of business flood through the door.

This may not seem like a huge issue with the stamp duty deadline still five months away but we all know how easy it is for chains to break, mortgage offers to be pulled and people’s circumstances to change.

Factors which really do place a sustained emphasis on speed and efficiency.


Time of the essence

Speed has always been a key word within bridging finance and this is a product type which will continue rising to the fore in Q4 and even more so in Q1 2021 as buyers will need to move swiftly to complete before the stamp duty deadline.

Bridging lenders are experts in processing applications under extreme time constraints and this type of finance will help more traditional homebuyers than ever to ensure chains are not broken, completions can take place on schedule and that robust plans are in place to exit this type of financial arrangement as soon as possible after the property has been secured.

Time really will be of the essence for thousands of potential buyers in the coming months.

Advisers with a clear route to bridging and other alternative forms of finance will be in a prime position to help a wider variety of clients to navigate any potential roadblocks.


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