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Bridging bonanza subsides

Figures released by the Association of Bridging Professionals show larger bridging lenders’ volumes fell in Q1 2012.

Sarah Davidson, 8 May, 2012

Fahim Antoniades, group director at Mortgage Centre IFA, said it could be "that we are coming off the crest of the bridging bonanza wave".

He said: "Much has been talked about how bridging has moved on to new levels and how this has sparked innovation, drive and new entrants to the market.

"Yet the past three months' data sample shows the larger players going through a significant downturn in volumes."

The AOBP data, which is assimilated from broker business submissions to the trade body, shows private funders taking £6.7m of short-term loans in February 2012, Masthaven £1.7m and Omni Capital £1.6m.

Dragonfly Property Finance meanwhile looks as though it did £0.7m in February.

Antoniades added: "The bigger established players are seeing a decline in lending volumes, whereas the newer or smaller ones are showing an increase.

"Whether the time snap-shot is too small to draw definitive conclusions from is another matter but if one were to infer anything from this it would have to be that either the smaller and newer players are providing fierce competition to the established larger ones or that the latter group need to call in some loans and recapitalise before they are able to drive volumes again.

"Whilst the truth probably lies somewhere in between, I can't help thinking whether there might be something else at play."

Antoniades said the slowdown could be forced by a lack of exit finance in the mainstream residential and Buy-to-let market.

He added: "This might explain why the more established players are witnessing a slow-down whereas the newer, smaller lenders are striving forward since perhaps they as yet have to come to face the exit problem to the same degree."

He said it could well be that the very conditions which sparked the bridging boom in the first place – lack of liquidity – is the very thing which eventually kills it off.

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1 Comment(s)

Bob Sturges wrote:

While wholeheartedly applauding the AOBP's laudable efforts to bring definition to the scale of bridging lending, I echo Fahim's words and advise caution into reading too much into one month's worth of data. By their own clear admission (see their website), the AOBP's statistics are collected from a limited number of distributors/packagers and cannot possibly tell the full story. Using Omni Capital as an example, we lent in February 2012 considerably more than the £1.6m figure quoted (in fact, nearly ten times more) - all via brokers/packagers. While I obviously cannot comment on other lenders' data, I doubt we're an isolated example. That said, the AOBP's data is useful in indicative terms, particularly when viewed over a longer period (they've just published an 11-month summary of lending performance). But it isn't definitive and shouldn't be treated as such.

Tuesday, May 08, 2012 11:15:59 AM GMT

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