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Regulated bridging should be ‘part of every broker’s current toolkit’ – Lawton

by: Richard Lawton, head of bridging & commercial at Precise Mortgages, part of the OSB Group
  • 10/11/2022
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Regulated bridging should be ‘part of every broker’s current toolkit’ – Lawton
Given the turmoil impacting every sector of the UK economy, it’s little wonder the housing market has cooled since the red-hot early months of 2022.

Yet demand for property, while understandably softening as consumer confidence wobbles, continues to outstrip supply. According to the latest RICS Residential Market Survey, estate agents report an ongoing shortage of available stock, with an average of just 34 homes for sale on their books – a record low.

Combine the supply/demand imbalance with an increasing interest rate environment, and the pressure really is on for buyers to snap up their dream property as soon as it becomes available.

We are seeing this race against time play out in the growing popularity of regulated bridging loans. Bridging finance obviously has an advantage over traditional mortgages as it can be arranged very quickly.

Regulated bridging, secured on an owner-occupied property or one soon to become owner-occupied, allows buyers to get their hands on their new home very quickly, before they have sold their existing property.

Regulated bridging can be used for a wide range of purposes, including carrying out refurbishment (light or heavy) or buying property at auction. But the current upward trend is for regulated bridging to finance borrowers downsizing, moving out of urban areas or simply breaking out of buying chains.


Downsizing and chain breaks primary uses for regulated bridging

There are of course multiple reasons why a homeowner might wish to downsize. Some people move to a smaller place when the children leave home, others when they can no longer manage the stairs (in the latter case, finding a new home is particularly problematic, given that bungalows make up per cent of the UK’s housing stock).

Considering the huge rise in energy prices, downsizing to a property with lower running costs may also be a motivating factor these days, adding to this upward trend. Whatever the stimulus for downsizing, a regulated bridge can get the buyer into their new home in weeks.

The pattern of moving out of larger conurbations to more rural areas, which began during the pandemic as more people sought outside space to help make lockdowns bearable, has continued in many parts of the UK.

With almost half of the UK’s adult population now involved in ‘hybrid’ working, the move from town to country could well become a long-term trend. Again, a regulated bridge allows a buyer to swing into action as soon as they find the sought-after home with the space they need.

And whatever the reasons for a home move, empowering your client to shake off a chain using a regulated bridge can circumvent multiple potential headaches and turbo-boost the buying process. Chains by their very nature can be complex, and particularly so in the current market, where mortgage product volatility is proving a challenge to buyers.


Inexperienced brokers may need ‘reassurance’ on price and lender reliability

So regulated bridging really should be part of every broker’s current toolkit. Those who are not so familiar with the bridging sector – and also those more experienced but concerned about current market instability – may need reassurance when it comes to price, and lender reliability.

On price, admittedly, the bridging rates charged industry-wide are inevitably edging up, but so far not to the extent of the mainstream market rates – and they are moving from the lowest ever average rate of 0.69 per cent in Q2 2022 according to Bridging Trends data.

And when it comes to reliability, brokers have the option of working with long-established lenders, who have great expertise and years of experience in bridging, including a number who offer the added backing of their bank status, providing security of funding and competitive pricing in these tumultuous times.

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