"It's a real positive to see established organisations at the forefront of the push for stronger standards. "
Within the industry we talk a lot about perception and the image of short-term finance, with that in mind it’s a real positive to see established organisations at the forefront of the push for stronger standards. Especially when this sector is approaching such an important crossroads.
Bridging finance has delivered significant growth in recent years and continues to do so. ASTL data for Q3 2019 highlighted that bridging loan applications saw an annual rise of nearly 17% in Q3 to reach a ‘staggering’ £6.1bn. Year-on-year annual applications hit nearly £23 billion and completions remained at more than £4 billion. However, it also revealed that the value of Q3 completions dipped by 2% on the same period last year to nearly £940 million, with year-on-year completions reported to be up by 1%. At the end of the third quarter, bridging loan books totalled £4.3bn, a reduction of 6% compared to the previous quarter, but an increase of more than 5% on the same period last year.
Bridging has come a long way in a relatively short space of time and when I refer to a ‘crossroads’ this is more in terms of the direction individual firms need to be taking rather than a realignment of the sector as a whole.
I read some recent commentary from Alan Cleary, manging director at Precise Mortgages, who offered a cautionary tale to the bridging world on the back of the second P2P lender to exit the industry this year, and the third short-term lender to fail in the past 12 months. He urged lenders to take note and be aware of their lending capabilities and responsibilities amidst some uncertain economic times. This is a very salient message in the current climate, and none of us involved within the industry want to see lenders fail. Although we also need to ensure that any new entrant, or existing lender, is doing business in a transparent, responsible and sustainable manner.
Specialist distributors have their part to play too. We need to consistently form relationships with lenders who can offer strong product lines aligned with the highest service standards and robust funding platforms. From the other direction, we also need to find ways to better educate and support intermediaries partners/introducers in identifying the circumstances, property types and clientele which might benefit from short-term lending.
In a similar vein, intermediaries should be open to considering short-term finance solutions for their clients if they have an in-depth understanding of a lender’s overall proposition, or a relationship in place with specialist distributors who can advise clients on the best path for them.
The bridging finance sector is in a good place. Standards have been raised; volumes are steadily growing, a wider variety of options are available, and the perception attached to this type of lending has improved. Where we go from here is up to lenders, specialist distributors and the intermediary community. Each will have different ideas and directions in which they want to take their business, and rightly so. But whatever road they take its important to keep the destination firmly in mind – and that is to service the needs of the end borrower in the right way by providing them with the right information to make an informed decision and the right solution to match their needs. The last thing we need is to get complacent and drive the market towards a dead end.
