The ever-improving reputation of the bridging lending market has resulted in an upturn in new business over the past year.
The National Association of Commercial Finance Brokers’ (NACFB) annual survey revealed that brokers wrote 74.6% more bridging business in the past year.
Total bridging finance business written in the year ending 30th June 2016 was £1.27bn compared to £727m the previous year.
‘It is more attractive than ever to borrowers’
Bridging & Commercial asked a number of key figures within the bridging finance community why there had been such an increase and Paul Wertheim, operations director at Mint Bridging, put the gain down to borrowers now seeing the advantages of bridging.
“Bridging is no longer a bottom of the barrel, last resort form of lending, and is heading towards being a mainstream form of finance.
“As such, it is more attractive than ever to borrowers.
“Combined with more competitive rates, bridging is affordable and accessible to the masses.”
Matthew Tooth, head of distribution at LendInvest, agreed adding: "As the reputation of the bridging market has improved, and more and more brokers have seen how the top lenders can deliver a speedy and efficient service to their clients at a competitive rate of interest, so we have seen the size of the industry grow.
“This year, with the implementation of the additional stamp duty charge for second homes, bridging loans offered property investors a fast and tax efficient way to expand their portfolios.”
‘Bridging's success can be attributed to a wider awareness of the product’
Bob Sturges, head of PR and communications at Fortwell Capital, felt that bridging was now a respectable mainstream product used to provide vital liquidity.
“Bridging’s success can be attributed to a wider awareness of the product and how it can be used as a flexible financial tool in myriad circumstances.
"For this, the intermediary sector and our trade bodies, such as the NACFB and the ASTL [Association of Short Term Lenders], deserve at least equal credit with the lenders who have helped make real this success.”
'Bridging is unquestionably here to stay'
Asked about whether bridging could continue this growth, Nick Hilton, head of lending a Century Capital, felt that it could be difficult with the amount of new lenders in a crowded market.
“I think longstanding lenders with a broad existing key client base will continue as always, but I do think you will see some of the newer lenders drop off within the next 12-18 months.
“Reflecting on the opposite of this, as long as rates are squeezed and the lenders cost of funds are low, then the bridging market will continue to boom, as will the interest from borrowers looking for quick solutions.”
Matthew was also cautious, adding: “It is questionable whether the market continues to grow at such a pace.
“The law of large numbers suggests that following up on several years of elevated growth is a tough ask."
Meanwhile, Bob concluded: “It will be tougher for all of us in the next couple of years, but bridging is unquestionably here to stay."
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