United Trust Bank extends bridging to Scotland
Until now, the bank’s bridging products were only available if the security property or properties were based in England or Wales.
UTB’s business development manager Paul Mansell, who serves brokers in the North East and Scotland, said he was looking to increase his contacts in Scotland.
Mansell added: “I’ve been working with several great brokers in Scotland and it’s clear there’s a growing demand for bridging finance. I’m looking forward to helping my existing broker contacts develop their bridging business as well as meeting new contacts throughout 2020.”
Mike Walters, head of sales – mortgages and bridging at United Trust Bank (pictured), said: “We’re continually enhancing and improving UTB’s property finance offering and I’m excited that we can now provide bridging for Scottish properties.
“We see huge potential to develop the bridging market in Scotland as we have done across many other parts of Great Britain over the last few years with considerable success.”
The Lending Channel, a broker firm based in Perth, Scotland completed UTB’s first bridging loan in the country which was a regulated loan of £160,000.to facilitate a house purchase.
Alistair Ewing, managing director at The Lending Channel, said: “We’ve enjoyed an excellent working relationship with UTB for a number of years and we were delighted when they decided to launch their short-term finance proposition in Scotland.”
FCA to use Senior Managers Regime to draw in unregulated bridging – Blackwell
Speaking at the Association of Short Term Lenders’ (ASTL) annual conference in London, Blackwell said the unregulated activity of regulated short-term lenders would be under the FCA’s scrutiny after the new regime was introduced on 9 December.
Blackwell said: “The FCA has made it clear that the conduct rules under the new regime are not limited to regulated activities. They also apply to unregulated activities.
“The SMCR gives the regulator a hook to draw in conduct around unregulated activity. So if you are regulated firm you are going to be on the hook not only for your regulated activity but your also unregulated bridging.”
Writing for Specialist Lending Solutions in September, outgoing chief executive of the ASTL Benson Hersch said “the writing was on the wall” for the unregulated short-term lending market. He said the sector should expect regulation to come to the short-term commercial lending sector.
In August, the Treasury Select Committee (TSC) called for the government to extend the remit and powers of the Financial Conduct Authority to prevent, among other risks, potential future harm caused by unregulated SME lending.
In Hersch’s column he said he feared the FCA would not adopt a “light touch” approach. He warned that if the FCA were given extended powers, it would “create regulation for the bad apples, not those lenders that follow best practice” which could end up increasing costs and stifling innovation.
Not going to happen overnight
But the regulation of short-term commercial lending, carried out by unregulated firms remains a long way off, said Blackwell.
“Regulating the unregulated bridging market is just not going to happen overnight,” she said.
“The TSC has made it clear that it wants the FCA to have some sort of power where it can intervene and the FCA said ‘yes we would like that’, but government has said no we are not prepared to go that far,” added Blackwell.
Blackwell warned that while the regulator could not directly act to intervene in an unregulated firm’s activity it still monitored what went on and if necessary it would draw the government’s attention to problems and try to persuade government to act.
But she added: “That is actually a long and painful process; trying to get the Treasury to except your evidence that there are problems going on in the market place which need intervention.”
Code and conduct alignment
In the meantime Blackwell said lenders should take the opportunity to self-regulate if they wanted to keep the formal regulation of their sector at bay.
She said: “In its mission statement – the FCA said it sees an ongoing role for self-regulatory initiatives such as promoting good practice through voluntary industry standards spanning activities that are not regulated,” she said.
The ASTL’s professional standards and values charter was highlighted by Blackwell as good example of such an initiative.
She continued: “In response to the TSC’s desire to regulate, the FCA raised the possibility of a combination between an industry code and the SM&CR as going some way to address unregulated grey areas.
“I would encourage the ASTL to speak to the FCA about ensuring the industry code that you have in existence is somehow aligned with the conduct rules. That is going to be a lot less costly and lot less painful than having regulation extend across the unregulated market.”
Buyers’ market for bridging as volumes stable and completion times up
In the three months to September, £181.64 million of short-term lending was transacted, a £3.2 million decrease on the second quarter.
Meanwhile, average completion times crept up by seven days to 51 and average interest rates fell by 0.05 per cent to 0.74 per cent.
A rise in the proportion of regulated loans is reported to be the reason for the drop in average interest rates.
Some 42 per cent of total loans transacted by Bridging Trends’ contributors were regulated- up from 37.5 per cent in Q2.
Almost a quarter (22 per cent) of all lending transacted by the nine firms who contribute to the Bridging Trends survey said the most popular use of a bridging loan was to purchase investment property. It is the third consecutive quarter that purchasing an investment property has been the top reason for taking out bridging finance.
A traditional chain-break was the second most popular use for bridging finance, contributing to 20 per cent of all lending in Q3, up from 18 per cent in Q2 2019.
Bridging loans for business purposes decreased from 12 per cent to 6 per cent in the third quarter.
Demand for second charge loans remained consistent at 18.4 per cent down from 18.8 per cent in Q2 2018.
Average loan to value levels increased by 0.02 per cent in the third quarter to 53.1 per cent.
For the fourth consecutive quarter, the average term of a bridging loan remained at 12 months.
“It is a buyers’ market right now, especially for international buyers who are also taking advantage of the weak pound. This, and suppressed prices due to the political uncertainty, means that many international buyers are picking up assets at over 20 per cent lower than they might have been three years ago,” said Chris Whitney, head of specialist lending at Enness.
“Finance for international investors is widely available but the better loans tend to be with lenders who aren’t particularly quick. Some first-time overseas buyers also take a while to be educated in how the UK purchase and finance system works.
“As it is a buyers’ market many get good purchase prices agreed on the basis they can complete within a relatively short space of time. This means that demand for quick and straightforward short-term loans is very strong,” Enness added.
Gareth Lewis, commercial director at MT Finance, said: “It’s quite clear that the uncertainty of Brexit has had its effect on the London property market, with prices dropping significantly in many boroughs. This has prompted many property investors to use the speed of bridging loans to act quickly on opportunities. With the EU deadline now extended, it would be reasonable that we’ll see the same trends continue throughout the rest of the year.”
Brightstar to run specialist lending webinar series for brokers
The series starts with Precise Mortgages highlighting 10 opportunities for brokers to contact landlords within the next year, on Wednesday 11 September.
Then on Thursday 12 September, United Trust Bank will present a webinar on the many uses of bridging finance.
The series is slated to continue throughout the autumn with webinars from Kensington, Masthaven, MTF, Pepper Money and Shawbrook. They are expected to cover topics such as specialist residential, short term lending, second charge mortgages, complex buy-to-let, unsecured business loans and later life lending.
Michelle Westley (pictured), Brightstar Financial’s head of marketing, said: “Borrowers increasingly have a diverse range of circumstances to which lenders are responding. But we still hear of brokers turning away clients with complex requirements believing that they don’t have the time or expertise to identify an appropriate solution.”
“Our autumn webinars series aims to demystify the sector and give brokers direct access to some of the industry’s leading experts. You don’t have to be an expert for you and your clients to benefit from the specialist market. You just need to partner with a business that has the right resource and expertise,” Westley added.
More information is available on the Brightstar website here.
Hampshire Trust and Together complete bridging deals worth over £400k – roundup
Hampshire Trust completed the £430,000 bridging loan to support the refinancing of a commercial property development in Colchester.
The short term facility was provided at 70% loan to value (LTV) net and was turned around in nine days from initial enquiry to completion.
The security property, a former bank, was purchased in December 2016 for £275,000. Since then, it has been extended into four self-contained offices.
The bridging loan was required to raise capital to fund further acquisitions on the sites identified. The transaction was brokered by Boudicca Financial Solutions, a specialist independent commercial finance brokerage.
Alex Searle, sales director at HTB, said the lender appreciated that when borrowers need short-term lending, they typically needed it quickly.
F4B and Together secure loan in 24 hours
The deal arose after a client of Finance4Business (F4B) feared they would lose their £50,000 deposit after a late, legal hitch threatened their plans to expand via the purchase of adjoining land.
A longer-term loan facility with Atom Bank was in place but, because of a delay in returning searches, the customers were in danger of missing the seller’s deadline.
However, F4B contacted Together, using the existing valuation and supporting documentation from Atom.
The bridging loan was instructed on 1pm on Thursday with the funds released at 12pm the following day.
Guy Collier, the IFA who dealt with the case, said the client and broker were “delighted” with the service and outcome. He said: “The borrowers are valued clients of ours and we are very happy to have helped find a solution for them in their time of need.”
Russell Martin, managing director of F4B, said: “Short-term finance is an evolving market, with completion timescales increasing in the main. It is refreshing to see that, when required, quick bridging loans can still be provided.
“Relationships are key to completing deals at speed, and understanding the nuances and processes of specific lenders is paramount.”
Marc Goldberg, commercial CEO at Together (pictured), said: “It was a great outcome for the customer. They may have lost their £50,000 deposit if they hadn’t met the deadline and the price of the land would also have increased.
“This facility allowed the deal to complete on time so the clients could buy the land they needed to expand, at the agreed price, without any interruption to their business.”
Shawbrook overhauls short term commercial loans
The lender has also amended criteria and will accept applications from borrowers with no previous property experience.
And commercial to commercial refurbishments and lending on vacant commercial property will also be considered.
Three of the five products available are for borrowers carrying no or very little refurbishment, with rates from 0.43% per month up to 75% loan to value (LTV).
Two further products will be offered for heavy refurbishment with rates from 0.6% per month up to 75% LTV.
A 0.25% discount available for repeat borrowers will still be available, as well as no minimum interest periods or early repayment charges and a maximum 24 month term.
Emma Cox, sales director at Shawbrook Commercial Mortgages, said: “These improvements have been a long time coming and I am delighted to be able to announce them to kick off the summer months.
“The short term lending (STL) range has always been a top performer for Shawbrook, and we are confident that these changes will really resonate with our broker partners and their clients.
“We are also pleased to continue to deliver for ‘bridge to let’ investors, where the borrower looks to refinance the short-term loan onto a mortgage with no arrangement fee.
“We have more product innovation to the Shawbrook short term offering coming over the summer, and I look forward to announcing these in due course.”
Non buy-to-let income considered for second charge assessment – West One
West One confirmed non buy-to-let income can be used towards the affordability assessment for their second charge buy-to-let mortgage products.
Borrowers whose rental income covers 100% of the combined mortgage and second charge loan repayment are eligible to be considered for the new enhanced criteria to meet the debt to service cover ratios determined by tax banding starting at 125%.
This will be used towards the affordability assessment alongside their committed expenditure and current assets and liabilities.
The lender launched its lowest ever 5-year fixed rate at 4.65% in recent weeks, alongside a range of 5-year fixed rates without early repayment charges.
West One is also offering buy-to-let products for expats, buy-to-let mortgage prisoners, and extending lending to new security types including licensed Houses of Multiple Occupations (HMOs).
Marie Grundy sales director at West One, said: “We believe second charges will play an increasingly important role in the buy-to-let sector, providing landlords and property professionals with vital access to equity, facilitating investment into existing buy-to-let properties through home improvements, as well as enabling portfolio expansions.”
Tim Wheeldon, COO at Fluent for Advisers, said: “We are delighted to see that West One continues to demonstrate such a forward thinking and considered approach to the needs of intermediaries and their BTL customers through these latest enhancements.”
West One is planning to launch into development finance in Q2 2018, after lending £2.5bn since launch in 2007.
Funding 365 appoints new head of underwriting
Boakye joined Funding 365 in 2014 as an underwriter, and will be working in his new role to improve the lender’s product offering.
Boakye’s promotion also follows an appointment of graduate Tim Plumbridge to the underwriting team last week.
Funding 365 director Mike Strange commented: “We’re delighted to have Eddie as our head of underwriting. He has been with us since the early days of our company and has been integral to our growth and development.
“We’re excited about the future with Eddie as a key member of our team.”
Boakye added: “I’ve been here for a number of years and have witnessed first-hand a significant rise in all areas of the business.
“I’m delighted to embark on this new opportunity, and look forward to working with my colleagues and clients to continue the growth and success of Funding 365.”
ASTL members lent £391m to developers in Q4 2017
Of the £319.4m, £197.8m was categorised as bridging loans – a 19.6% increase from the previous quarter.
The three months also saw ASTL members exceeding £1bn in completions for the first time, with annual completions in bridging lending passing £3.5bn last year.
The trade body said the figures highlighted a growing trend for property developers to rely on short term lending.
Benson Hersch, chief executive officer of the ASTL said: “The housing crisis continues to be high on the government’s agenda and Sajid Javid highlighted last year that he wanted to do more to support SME building firms. Increasingly these small developers are relying on short term funding solutions, because traditional forms of finance are often not available to them.
“Such a trend demonstrates how alternative forms of finance are providing the solutions where the government and the banking industry should be and could be bridging the gap.
“These figures are taken from the responses from ASTL members, which include most of the key lenders in the bridging market.”
Hampshire Trust Bank ups LTV on short-term lending
The specialist bank has raised the LTV from 70% to 75%, including interest roll-up and fees.
The lender offers bridging and term finance secured against buy-to-let, semi-commercial and commercial property with loan amounts from £100,000 to £2.5m.
Anna Lewis, head of production, commercial mortgages, at Hampshire Trust Bank, said: “We listened to our brokers and enhanced our short term lending product in direct response to their feedback.
“We are focused on continuing to improve the service we provide to intermediaries and are committed to working with them to support the growth of their businesses.
“In October the commercial mortgages team had its busiest month on record and it achieved this while still upholding its broker service standards, which is key for us. We expect to be announcing more enhancements and improvements in the coming months.”