Bridging lender confidence nosedives following Brexit vote

Ryan Fowler

July 12, 2016

benson hersch

Confidence amongst bridging lenders dropped noticeably following the EU referendum, a poll taken by the Association of Short Term Lenders has revealed. 

When lenders were asked how they felt about the UK economy 24% said they were more positive about the long-term future since the Brexit vote – the downside was that 60% felt less positive.

This compares to 38% feeling positive about the long-term future of the UK economy directly after the budget back in April, when only 19% felt less positive.

The good and bad of re-bridging

When looking at shorter term economic prospects, there was also a downturn; with 66% saying they were not confident about the prospects of the UK economy over the next 12 months, double the 33% who had not been confident following the budget in early April.

Benson Hersch (pictured), CEO of the ASTL, said: “It is clear that there was a general sense of shock immediately following the referendum which led to some dramatic results in the sentiment survey but this negativity has now been tempered in many quarters.

“In speaking to lender members, several have expressed that while the UK economy is undoubtedly in for a rocky ride over the next few months or even longer, much of what we are seeing is a correction that would have happened anyway.

“Several feel that both the pound and property were overvalued and a correction was due, but that this correction was brought forward by Brexit.

“Brexit is also a good excuse for both politicians and some businesses to release bad news that actually pre-dates Brexit by some time and many situations are now going to be blamed on it.

“The sentiment survey was a snapshot in time immediately following the referendum, but I expect to see these results swing back up towards the positive as the markets settle down and people get used to the result.”

Interestingly there are already signs that these responses were an impulsive reaction immediately following the vote and that this view has already been tempered in the week since the survey was undertaken.

With 40 or so people around the table, of both lender members and associates, including valuers, auditors and lawyers, most seemed relatively sanguine about our new reality.

The majority reported that they had not yet seen any noticeable change in business, with some lenders either doing their largest ever loans while several smaller lenders reported a considerable uplift in business.

This was reflected in the sentiment survey where 75% of lenders felt that, regardless of the outlook for the economy as a whole, the volume of business at their firm would either increase or stay the same over the next six months. That is not to overlook the one quarter of lenders who thought that their business volumes would decrease, up from only 5% two months’ ago.

Lenders were less positive about the growth of the bridging market as a whole: In April 71% thought the total bridging market would grow over the following 12 months, this reduced to 20% in the post referendum survey.

The next survey will be conducted in six weeks’ time, to see how lenders feel once they have had time to reflect on the state of the economy in a post Brexit referendum world.

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