West One: annual bridging lending sees month-on-month increase
Gross annual bridging lending saw a month-on-month increase of £4.4bn, according to the West One Bridging Index.
The short-term lending market jumped 12.5% through March and April, with last minute purchases ahead of the early April deadline for stamp duty, the data suggests.
While the residential market appears to be relatively unaffected by Brexit, the commercial market has slowed. In July, there were 1.7% fewer commercial property transactions compared with the same month last year. This represents the first year-on-year drop since April 2013.
Stephen Wasserman, managing director of West One Loans, said: “Once the initial surprise of the referendum subsided, bridging lenders got back to business. While some deals did fall through at the end of June, plenty of new opportunities have appeared. With funding from traditional lenders drying up, the short-term finance sector has stepped up to plug the financing gap.
“As fears of a new recession fade and confidence returns to the housing market, growth in the short-term finance sector will likely accelerate as residential transactions pick up pace.
“Clearly, with Brexit negations still to take place, uncertainty does still linger. However, the UK’s exit won’t take place for a few years, so demand for short-term finance remains strong, even if longer-term lenders may be struggling.”
The size of the typical bridging loan fell to £798,000 from £883,000 in May. The average loan-to-value ratio also fell 1% following the referendum.
Danny Waters, chief executive of parent Enra Group, said: “The short-term finance sector has succeeded in growing despite economic uncertainty.
“With gross annual lending only passing £2bn in April 2014, bridging lending has doubled in the last two years.
“Short-term finance now has a much more prominent role in the wider financial sector, with far more borrowers making use of the speed and flexibility of bridging loans.”