As a result of the improved economic outlook and broader political stability following the General Election result, 2020 looks set to be another positive year for the property market, including the bridging and development sectors. The latest sentiment survey from the Association of Short Term Lenders (ASTL) shows that 72% of bridging lenders expect their business to grow in the coming months and more than half expect the market to grow.
Data provided by members of the ASTL, shows that the third quarter of 2019 saw bridging loan applications growth of almost 17% on the same period in 2018, reaching £6.1 billion. With completions at over £4 billion, year-on-year annual applications reached nearly £23 billion. Accordingly, the figures suggest that bridging loan books totalled £4.3 billion at the end of Q3. Given the political and economic uncertainty that was affecting transactional activity in the mainstream residential and buy-to-let sectors at the time, the figures highlight strong growth in the sector.
This year has seen another new lender enter the sector, Atelier Capital Partners. Octane Capital has reduced its risk rating and has cut rates on its larger bridging, developer exit and refurbishment loans. Hope Capital has further enhanced its Hope Seven 5 bridging product. Ultimate Finance has announced that it is increasing the top limit on its bridging finance to £2.5 million, up from £1.5 million.
Blend Network has reduced rates across its bridging and development products from 0.9% per month to 0.75%. United Trust Bank (UTB) has extended its bridging offering to Scotland. Nucleus Commercial Finance and Paragon Bank have announced a £25 million funding line to support more SMEs while Tuscan Capital has gained additional funding from a UK-based provider which will offer the capacity to increase the lender’s loan book size to over £150 million.
Continued product innovation and constantly improving pricing make bridging finance an attractive proposition to a wider audience. With the slow-moving property market set to speed up, this competitive sector can increase its reach to more customers and extend distribution via more brokers.
Lenders can take advantage of this opportunity by ensuring they have a technology platform that supports their broker and their customer requirements. By ensuring speedy decisions through automation and automated document management, robust rules engines can deliver a vital yes or no answer to brokers as soon as possible.
Bridging lenders have grown in confidence about the outlook for the UK economy, their own business and the bridging sector. It is, therefore, important that lenders manage their expansion, and retention, plans carefully and invest in technology that can best help them achieve their growth plans .
