Chris Fairfax, managing director of Positive Lending, said that the short-term specialist has witnessed an increasing number of homebuyers looking to bridging loans when the sale of their current property falls through due to Brexit related concerns.
“The Brexit referendum is causing questions surrounding the economy and the impact on property prices, so some purchasers are pulling out creating broken chains which need to be restored quickly – bridging is an option to mend these chains,” said Fairfax.
“We are finding an increasing number of these cases as the vote approaches and expect this to increase in the coming weeks.”
He explained that the chains are being broken when a buyer is committed to purchasing a new house but the buyer for their current property pulls out.
Fairfax said that, while the impact of a ‘yes’ vote is difficult to predict, it could well lead to a flurry of would-be buyers pulling out of purchases.
“I couldn’t make a prediction on what would happen if Britain does leave the EU but there is widespread concern about depreciation of property values which could bring about a sizeable volume of purchasers pulling out. This would likely mean more sellers turn to bridging as the chains are broken.”
But while bridging may become a more popular escape clause for buyers, Fairfax said this wouldn’t be a good thing for the market.
“Although there would be an opportunity for bridging finance as an alternative solution, if the market shrinks and lenders offer more restrictive products, it will have a negative impact on bridging as it relies on a buoyant housing market.”
The Brexit referendum takes place on 23 June.