You may have seen the recent Bridging Market Survey, which was conducted by Interpath in collaboration with the Bridging & Development Lenders Association (BDLA).
The report provides comprehensive insights into trends and prospects, based on responses from more than 50 market participants, including lenders, brokers and other service providers.
Just over 90% of responses came from lenders and around 6% from brokers. Geographically, the largest proportion of survey participants (57%) was from London and the Southeast, followed by the Midlands & Southwest (21%) and the North (19%).
The research told a story of optimism in the market
Overall, the research told a story of optimism in the market. There has been growth in business volumes in the past year. The industry expects institutional funding to remain available over the next 12 months, plus continued strong levels of competition and a consistent cost of origination.
Importantly, there is an expectation of no change in credit quality.
Refurbishment remains the most popular reason for obtaining a bridging loan, with 45% of respondents ranking it top. Auction purchases and rebridging are also common uses, with 23% and 19% of respondents respectively. In terms of exit routes, refinance onto buy-to-let products and sale of property are the most common strategies, cited by 45% and 42% of respondents respectively.
The market’s competitive landscape was highlighted by the importance placed on speed of execution, with 36% of respondents identifying this as the most critical factor when choosing a bridging lender.
The bridging market is not a niche; it is a burgeoning field with significant potential for growth and innovation
Low pricing and high-quality service were also highlighted as significant considerations, reflecting the need for lenders to offer both value and efficiency to remain competitive.
Ongoing competition
The outlook for bridging finance remains positive. An environment of ongoing competition will continue to prioritise customer needs.
According to survey respondents, the desire to transact and own property remains strong, and there is optimism that interest rates will start to soften in the latter half of 2024, further stimulating market activity.
Obtaining the CPSP qualification offers several benefits for mortgage advisers
A notable challenge, highlighted by the survey, is the increasing lag in average days to completion on loans, observed by 51% of respondents, and this is perhaps one of the reasons behind increasing loan terms. The majority of respondents (57%) selected nine to 12 months as the average loan term. However, 32% chose 12 to 15 months, which suggests that average loan terms are creeping up.
For brokers, the increasing importance of bridging finance is clear. The research found that independent brokers were the most important primary channel for originations, among 53% of survey respondents, while 32% of respondents opted for master brokers, making this the second most important channel.
Expertise
Whether you choose to engage with bridging directly or to work with a specialist in the sector, one way to grow your understanding and to demonstrate your expertise to clients and potential clients is with the Certified Practitioner in Specialist Property Finance (CPSP) qualification.
According to survey respondents, the desire to transact and own property remains strong
Launched last year by the BDLA in partnership with the Financial Intermediary & Broker Association and the London Institute of Banking & Finance, the CPSP is designed to elevate industry standards, enhance professionalism and bolster the sector’s reputation.
Obtaining the CPSP qualification offers several benefits for mortgage advisers. It provides in-depth knowledge of the bridging finance market, covering everything from regulatory frameworks to innovative financing solutions.
This expertise enables advisers to offer more comprehensive and informed advice to clients, enhancing their credibility and differentiating them in a competitive market.
With a deeper understanding of bridging finance, advisers can attract a wider range of clients, including property investors, developers and those seeking short-term financing solutions.
Refurbishment remains the most popular reason for obtaining a bridging loan, with 45% of respondents ranking it top
The bridging finance market is not a niche; it is a burgeoning field with significant potential for growth and innovation.
Mortgage advisers who embrace this opportunity, supported by the CPSP qualification, will be well positioned to succeed and make a meaningful impact in the industry.
As the bridging market continues to evolve, staying informed and proactive will be key to leveraging the full potential of the sector.
Vic Jannels is chief executive of the Bridging & Development Lenders Association
This article featured in the September 2024 edition of Mortgage Strategy.
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