FR: How will future regulation and a potential rate rise affect the short term lending sector?
The next issue is the implementation of the MCD on 21st March. This will be yet another hurdle to overcome. By and large, lenders are ready for this, but there are definite concerns about whether brokers have fully realised all the implications. A rise in the bank rate will affect funding costs, but is not expected to have any major effect on bridging.
FR: Do you foresee rates continuing to fall, and if so, how can brokers find the right balance between headline rates and the right solution for their clients’ needs?
As bridging lending becomes more and more mainstream, rates will continue to fall. Not all customers qualify for the lower rates and in any case, rates are generally not the major driver in selection. Each firm providing bridging lending has a different approach. Service and knowledge of specific property sectors and geographical areas are important factors in choosing a lender. What a customer needs is certainty and brokers will need to match the needs of their clients with the ability of a lender to provide a solution to these.
FR: What more can be done to educate brokers on the benefits of short term lending?
The NACFB and AOBP are playing an important role in this, supplementing the sterling work done by lenders. The press can help to provide information to those brokers who don’t usually provide information on bridging. Where appropriate, bridging is a useful financial tool and all mortgage brokers should be made aware of its benefits.
FR: There has been recent discussion about whether the definition of bridging could be changed to 18 months to accommodate small development funding – is this something you would like to see?
Yes I would – certainly for many builders bridging is an ideal form of funding and there are several bridging firms which are well placed to provide development funding. The whole idea of bridging is implicit in the name, i.e. to provide a bridge between a short-term need for funding until either a sale or long-term funding can be put in place.
FR: You’ve stressed a need for the short term sector to tackle issues around fraud and regulation head on. What is the ASTL doing to help stop brokers and lenders becoming victims of fraud?
Fraud is an ever-present danger and the ASTL has invited speakers from anti-fraud organisations, both state and private, to meetings. Our very successful conference in October focussed on fraud. In addition, there are special arrangements with SIRA and National Hunter, fraud prevention and detection systems, whereby ASTL members get a special deal on joining.
FR: What other changes can we expect to see to short term lending over the next 12 months?
No doubt the measures put in place to dampen down consumer buy-to-let will affect the market as will the changes in stamp duty and the softening of the high-end residential market.
The bridging sector is well placed and funded to deal with growth. Bridging volumes will continue to grow and competition is expected to intensify as firms offer wider product ranges.
I’m really enjoying my role as CEO of the ASTL – the reputation of our members continues to grow and I’m very appreciative of their support. Every day brings new opportunities and challenges and I’m sure that our members are up to dealing with these.
I’d like to wish all your readers Compliments of the Season and best wishes for an extra-special 2016.
