Bridging has ‘real opportunity to be in the spotlight this year’ – Sealey

For Hope Capital, January started very promisingly, with plenty of enquiries flooding through the doors. This was fantastic to see, especially following our most successful year in business to date in 2023.

As we all know, inflation reached a record high in 2022, but has gradually been decreasing over recent months, which is great news for brokers and borrowers alike. In turn, rates are beginning to drop across the lending sphere and market confidence is growing.

So, where does this leave the specialist lending industry in terms of helping investors make the most of opportunities in 2024? Despite growing significantly as an industry, bridging finance is still often overlooked and misunderstood, with many brokers still unsure of how their clients can use the sector’s potential.

In 2024, its pivotal awareness of the industry continues to grow, and more brokers recognise the variety of situations this type of short-term finance can assist with.

Bridging goes beyond solely chain break

The most obvious reason to use a short-term loan – and perhaps what most people think about when they hear the word ‘bridging’ – is to break a chain in a residential property transaction so someone can buy a property before the existing one is sold. However, bridging extends beyond this and has an important role for investors and developers. For example, investors who are looking to purchase and refurbish commercial property or those who are looking to purchase property at auction and beat the 28-day deadline. Both of these situations can often be difficult and long-winded, which is where specialist short-term loans become the most viable solution.

Bridging lenders are usually able to provide finance much more quickly than mainstream lenders, often in a number of days rather than weeks or months. Most bridging lenders can also be much more flexible, as loans tend to be underwritten individually, meaning they can consider individual borrowers’ circumstances. It also means they can lend on those more complex cases that mainstream lenders often reject. This is key for investors and developers who are looking to make the most of investment opportunities, whether they are for residential, semi-commercial, commercial or land purposes.

However, there are some perceptions – which I would say are misconceptions – about the short-term sector that unfortunately put brokers off at times. One of the most common reasons is around how expensive bridging loans are perceived to be. The reality is that, while rates have aligned to changes in the wider market, they have fallen dramatically over the past few years, so are now considerably lower than they used to be. As with everything, benefiting from using a bridging loan all depends on what the investor aims to achieve and their individual circumstances, however by no means should it be viewed as a last resort.

Ultimately, the bridging sector is extremely versatile, and therefore has a real opportunity to be in the spotlight this year. While the past 12 months have been an eventful period for the property market and there are still a lot of changes happening, we will likely observe more shifts within the short-term lending sector in the coming months. That’s why product innovation and keeping a close eye on the market will be key, which is exactly what we plan to do here at Hope Capital.