05 Sep Bridging Finance – Unregulated Lenders Become Popular
A constantly changing political and economic market has made bridging finance a more attractive option when the need to complete a deal is urgent. It’s interesting to note that despite the high street banks tightening the criteria for bridging loans, the market has grown.
This is mostly due to the increase in popularity of unregulated lenders. Are there risks? Of course there are, but a reputable broker won’t put a new client at any foreseeable risk, and these lenders keep the market buoyant.
Bridging Finance – A Need for Broker Understanding
Recent research undertaken by Hope Capital revealed that as many as 20% of brokers didn’t quite understand the bridging process. This research also revealed that over half of the brokers felt that more flexibility was needed on LTVs.
Just under half also expressed the need for lenders to increase the speed of service. Combined with a reduction in rates, they felt it would improve market accessibility.
The research also revealed common issues that continue to dog the application process for bridging finance. By far the most significant complaint was delays caused by solicitors. Additionally, collating client information and lender approval came a close second.
Jonathan Sealey, CEO at Hope Capital, said, “Like any area of lending, there are areas that brokers would like to see improved. We are keen to address these by always offering the fastest turnaround times”.
Bridging finance increased by 10% during 2017. A clear indication that brokers are turning to bridging lenders to cover gaps that the high street market cannot fill.
It has also become clear that because every client is different, brokers are looking for solutions specific to their client’s needs. Calling for lower rates has been a feature since lending for property finance began. This won’t change, and it is the state of the market that will ultimately dictate how low a lender will go.
Growth in the bridging market is providing more opportunity for unregulated lenders and a good broker will know which ones to turn to. Signals indicate that the market will continue to grow year on year as the regulated industry clamps down on lending criteria.
This does not need to hurt property finance. It is quite possible that emerging unregulated bridging lenders will discover a niche that enables the property market to prosper. Especially for property developers.