Sure there were the odd one or two “open bridges” but they were the exception rather than the norm. Fast forward 7 or 8 years and there is now no such thing as a “closed bridge” - although many will tell you there still is.
The bread and butter of today’s bridging finance market is the auction purchase, chain break or capital raise where the exit route is refinance some way down the line or typically sale of property...and how long does that take nowadays?
There are of course many reasons why bridging finance has increased in both volume and media attention over these intervening years. The paucity of bank’s willingness to lend is often cited as the main reason bridging finance has experienced a mini boom, and I would have to agree on the whole. There are still daily requests from clients how have been offered anything up to 50% off their current bank loan if they can repay by a specified date.
Banks go through phases where they seem happy to lose millions of pounds of loan book, just so they can get it off their balance sheet.
Bridging lenders must really make hay whilst the sun is shining, and many have. Not a week goes by without a new lender entering the market or a new fund being used for short term lending. The media have picked up on this new kid on the block and have been best friends in the short term. Quite where it will all end up no one knows.
FSA regulation of the market is something that is on the horizon within the next few years, and those that are already regulated must be feeling pretty good about themselves as it will surely be a lot harder to enter the market when this eventuality happens.
Those in the industry who compare the bridging finance boom to that of the subprime boom are of course much mistaken. The subprime boom stemmed from across the pond whereas bridging finance is pretty much home-grown.
The days of a 95% self cert mortgage with any CCJ’s and any mortgage arrears seem a very dim and distant memory, and one that won’t be coming back again in a hurry. The regulated bridging market and those deals that do not fall under the auspices of the FSA are at much more manageable LTV’s thus ensuring longevity of the industry.
