The bridging scene – opportunities despite challenges

The bridging scene – opportunities despite challenges

Issues such as adverse credit, affordability and stricter stress testing and lending criteria are continuing to affect an investor’s ability to obtain mainstream funding.

However, according to a recent industry poll, in the last 12 months 75% of investors were unable to secure mainstream. It is therefore no surprise that demand for specialist mortgages are on the rise, as more and more investors turn to bridging finance to fund their property acquisitions.

The latest quarterly figures from the ASTL’s bridging lender members also made for interesting reading. The value of applications for bridging loans saw an increase of just under 14%, compared to the previous quarter. This meant that there was a 123% year on year rise in bridging applications, while the amount of loans written in Q1 were 11% higher than the same quarter in 2016.

Therefore, despite ongoing economic and political uncertainties and challenges, the specialist market has seen this as an opportunity to gain market share, and the changing landscape has opened new doors for bridging lenders like Hope Capital. As a result of the increasingly competitive market and the low interest rate environment, there is a wider availability of products which is helping to meet the growing demand from borrowers, particularly in previously underserved areas of the market. For example, those with non-standard circumstances, complex income or the self-employed.

This greater availability of specialist mortgages is of course good news. Everyone deserves access to a wider choice of products and to specialist underwriting that recognises personal requirements and circumstances. In fact, the increase in mortgage completions over the past year is in itself a testament to the intermediary market. This is reflected in intermediaries’ high levels of confidence, while figures from the ASTL in April revealed that 45% of its lender members are confident about the future prospects about the economy, compared to just 35% in November 2016.

As I’ve mentioned before, the specialist lending market really is special. Combining speed with flexibility, bridging finance is not only used to fund a plethora of situations, such as conversions and portfolio growth. It is specifically designed to cater for more complex cases such as high LTV lending and lending into retirement, and each case is looked at on an individual basis in terms of opportunity as well as risk.

Despite the forecasts made before the referendum, the specialist lending sector is in good shape; consumers have continued to consume and it really has proved to be business as usual. I am confident that the desire for homeownership and increasing demand from developers will ultimately help to support the housing market and, more specifically, the specialist lending arena in 2017 and beyond.

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