The conference held on Tuesday, at the prestigious Painters’ Hall in the City of London, was attended by 140 members of the bridging industry.
The conference was held to prepare lenders, brokers and service providers in the industry for the opportunities and challenges faced by the bridging finance industry. It addressed the concerns of many regulated lenders regarding the implications of the MMR since it came into effect on April this year.
Speaking at the conference, Lynda Blackwell, Manager of Mortgage Policy at FCA said that bridging finance is often more accessible than the mainstream market post MMR. As many borrowers are now facing difficulty, the pressures on mainstream lenders have also increased, chasing a market share that’s 50 percent smaller.
Lynda added that bridging finance plays an important role in the market and has an important part to play especially regarding speed and flexibility. The regulator is concerned however that bridging is being used in place of a mortgage because of tougher regulations in the mainstream market. As such, she said that it is important that consumers are getting bridging finance for the right reasons, that they fully understand the implications and costs and have a clear exit strategy in place. She also said that the bridging sector had changed dramatically for the better over the past ten years, and that the efforts of the ASTL had much to do with this.
Andrew Fyfe, Detective Chief Inspector within the Economic Crime Directorate, City of London Police, then addressed the types of fraud in the industry revealing that all the various types of fraud cost the United Kingdom £52 billon each year. He looked not only at mortgage fraud but also the effect of insider crime on financial institutions, citing a fraud of over £1billion at one organisation this year alone.
Afternoon speakers included Robert Sinclair, CEO of the Association of Mortgage Intermediaries, who looked at the implications of the European Mortgage Directive on first and second charge lending. He predicted that two base rate rises next year will bring interest rates to 1%; although he believes that not all of that will be passed to borrowers.
Building on this, Susan Emmett, a director in the residential research team at Savills, forecast that base rate could rise to 2.5% by 2017 and predicted house price growth of 25% over the same period. However, Savills does predict that the London market will have lower house price inflation than the rest of the South, as people move out of London looking for more affordable housing.
Benson Hersch, CEO of ASTL said that:
“It was a hugely successful day with a very high turnout.”
Regarding the state of the market he said, “The residential market will continue to prosper and the constraints of the MMR and the forthcoming EU Mortgage Credit Directive will need to be dealt with as ASTL members continue to be at the forefront of responsible lending. In the latest quarterly figures from ASTL members, the value of bridging loans increased by 92% compared to the same quarter last year while business confidence remains high. This certainly augurs well for both the industry and consumers.”
