Opportunities are still out there in the bridging market
Maxim Cohen, (pictured) founder and chief executive at The UK Adviser
A year of growth
Despite some turbulence in the financial markets, results revealed that the bridging market grew by 18% last year while the housing market remained flat – suggesting 2018 was a year where borrowers decided to opt for fast and flexible loans, but what does the future look like for the bridging loan market?
Although the ongoing uncertainty surrounding the UK’s departure from the EU has created some pessimism in the media, ASTL recently published its annual sentiment survey which surprisingly showed that more than 57% of respondents were confident about the long-term future of the UK economy, compared to just 37% in 2017.
What are bridging loans being used for?
These loans could possibly have been made to be used for further investment purchases to take advantage of slower consumer purchases making it better for landlords to obtain properties and bolster yields against the Brexit uncertainty or possibly due to legislation making it tougher to purchase new properties. Either way, the growth and positive sentiment in the industry has created a strong foundation which bodes well for the sector.
So, what are opportunities for both advisers and lenders to use bridging loans to increase their client base?
Brexit – deal or no deal
A no-deal could potentially result in a drop in the pound which could lead to more investors of UK property. We would expect a surge in demand for property purchases and in turn – the opportunity for advisers and lenders to facilitate swift loans.
We’d expect an exit with May’s deal to grow confidence in the market from not only developers and investors but also within the residential market, requiring the need for bridging loans in order to obtain property fast.
With new legislations making it tougher to purchase new properties, there’s huge opportunity for advisers to educate investors about how they might use bridging loans as a solution. This could be through acquiring properties at lower prices and using a bridging loan to make improvements to the properties with the aim being to achieve greater yields or capital growth once sold.
With bridging loans able to be arranged in days and at most weeks, compared to mortgages which can take months, bridging loans can also offer a solution to clients who may wish to purchase at an auction where there are very real time pressures for financing.
Regardless of the Brexit result and legislation changes in the housing market. It’s evident that there are clear opportunities for advisers and lenders to capitalise on the market by using bridging loans to offer clients the best solutions.