Bridging market returning to post-referendum levels

Bridging market returning to post-referendum levels
The drop in business in the wider market which followed in the aftermath of the Leave vote last June appears to have been only a blip, and has since been followed by a return to sustained growth.

Annual bridging lending grew for the third consecutive quarter to reach £4.3bn in June - a 4.2% increase from June 2016’s figures and approaching 2016’s pre-EU Referendum high of £4.4bn, according to West One research.

West One says that although it remains too soon to identify a longer-run trend to smaller loans, the first half of 2017 saw fewer large transactions coming to market

Interest rates finished Q1 at 1.04%, having seen after steady falls throughout the second half of 2016. They fell further in Q2 2017, with April at 1.03%, 1.02% in May, before falling below the 1.00% line in June, with a record low of 0.96%.


Stephen Wasserman, Managing Director of West One, said: “After a substantial dip in the market’s performance in the immediate aftermath of the Referendum, it’s obviously very encouraging that the bridging sector is seeing its third consecutive quarter of annualised growth. With this period including the significant political and economic volatility of Article 50 being issued, a snap General Election that delivered a hung Parliament and then the formal initiation of Brexit negotiations, the continued recovery only serves to underpin the resilience of the bridging market.

"At West One, we’ve seen a steady rise in demand for our bridging over the course of the last 9 months, and suspect this is due to more and more property professionals turning to alternative forms of finance, as a result of political uncertainty affecting appetite from conventional lenders. The drop in business in the wider market which followed in the aftermath of the Leave vote last June appears to have been only a blip, and has since been followed by a return to sustained growth. We expect that the bridging market will continue to this pattern of solid growth, in spite of an apparent slowdown in the housing market, as it takes up further slack in funding for property projects.”

Danny Waters, CEO of Enra Group, added: “Although we have seen a period of strong growth in the bridging sector, there are still challenges ahead. The Brexit negotiations will likely cast a shadow over the property market for the foreseeable future, and with inflation continuing to be a problem, it is possible that we could see an interest rate increase in the coming months. Whatever happens next, the industry needs to be ready with diverse and flexible financing options for property purchasers. The bridging sector has seen a 5-fold growth in lending since 2011 and is well placed to take advantage of economic fluctuations, being able to adapt to changing needs as and when they emerge.”

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