Sentiment amongst bridging lenders has bounced back considerably since the EU referendum in June, according to the Association of Short Term Lenders.
The ASTL conducted a survey amongst its lender members in the week directly following the referendum. The results at that time showed a sharp drop in sentiment with 67% of respondents feeling less confident about the long-term prospects of the UK economy, compared to 81% feeling confident or neutral after the budget in April.
The current survey was conducted exactly two months on, at the end of August; and the results tell a very different story. Now 30% of respondents say they are positive about the long term future for the UK economy, up from just 6% following the vote in June. 37% have neutral feelings about the longer term prospects for the UK; while 33% are not confident about the UK’s economic prospects. This is just half the number of people who said they were not confident in June. This means that 24% of lenders are more confident than they were following the referendum result. An additional 10% have changed from negative to neutral.
This confidence has also spread to the prospects for their own businesses 71% of bridging lenders feel that their business volumes will grow over the next six months, up from just 31% in June; while 23% think they will stay the same. Only 7% of lenders are now negative about the prospects of growth in their business.
The picture is not quite as positive for the bridging industry as a whole however. 45% think that the bridging market will grow over the next six months, 23% think that it would shrink and 32% think that it will stay the same. This however, shows a definite improvement from two months ago, at which point only 19% thought that the bridging market would grow and 51% thought that it would shrink.
Looking at the wider market, nobody thinks that house prices are going to rise over the next six months, which flies in the face of the recent Nationwide House Price Index which showed a 0.6% rise year to date. A significant 43% feel that house prices will drop, although this is lower than the 68% who thought this in June; while 57% think that house prices will stay the same.
Benson Hersch, chief executive of the ASTL says, “Optimists will take heart from these results as there has been a definite positive swing in the feelings of bridging lenders, reflected by a jump in the ASTL positivity index.
“This was no doubt buoyed by the Q2 bridging figures which showed bridging completions 19% higher than in Q2 2015, applications for loans up 61%, while loans written in the year ending June 2016 were £2.85bn, an increase of 17%. While only a few days of this was in the post Brexit period it clearly displays that the bridging industry is in a strong place at the moment.
“Today’s results show more of a sense of normality and highlight the sense of shock that was rippling through the industry in the days immediately following the referendum result. However it is clear that despite a bounce back, many respondents are still sitting on the fence, uncertain as to which way the wind may yet blow. Newspapers talk of a “phoney war” period, it will be interesting to see if these opinions change yet further following the ASTL conference in a week’s time, which will provide further in- depth information on the state of the economy, the housing market and the changes that may yet face the lending industry.”