"There is so much competition amongst lenders in the short-term finance market, which has driven competitive pricing and product innovation."
The figures, which are taken from ASTL members, show that bridging applications reached a record high of £12.7bn in the quarter ending December 2021 – an increase of 65.4% on the previous quarter, and the value of completions rose by 19% on Q3, reaching a new record of £1.2bn. Consequently, the ASTL says that bridging finance books have remained at more than £5bn, which is a record level for these set of figures.
However, this growth masks the potential for the bridging market, which we believe is still very much unfulfilled. There is so much competition amongst lenders in the short-term finance market, which has driven competitive pricing and product innovation. As a result, bridging offers an affordable and flexible solution to the funding problems faced by property investors and homeowners alike. Whether it’s helping to fix broken chains, speeding up transactions, funding auction purchases, property refurbishment or conversion, bridging can often be the right choice for the client. Yet we know that large numbers of brokers are still reticent when it comes to advising on this type of finance.
I sit on the FIBA Education Committee, which is working in collaboration with the ASTL to deliver a campaign of greater education and understanding about this sector to advisers and we can see that there remains a knowledge gap in this area.
We also understand that many brokers prefer to focus on advising clients in the product areas they work with every day. It’s impossible to be a sector expert in every area of secured lending and advising a client when you don’t have sufficient knowledge or experience could result in poor customer outcomes. But there is also a real danger that customers are not being presented with a bridging solution at all, due to brokers lacking confidence in this area, fearing that they will be caught out if questioned about the viability of the solution and worrying that they are not equipped with the correct knowledge. This is why we have recently launched ‘The Bridging Survey’ in partnership with West One, to better understand the barriers that are preventing brokers from considering bridging, and to better focus targeted education to these groups of brokers. It is also is why it makes so much sense to partner with a specialist distributor that enables you to leverage the experience and contacts of experts in a particular sector, so that you can advise your clients in confidence.
Alternatively, you could even refer the case to the specialist distributor to provide the advice and still benefit from the share of the fee. One consideration for advisers who take this referral route is whether or not the specialist distributor with whom they partner has adequate professional indemnity (PI) insurance, in the unlikely instance that there are issues with the case further down the line. This is an area where you should be careful as not all specialist distributors have the correct PI in place, and if you want to be sure that you are doing right by your client – and your business – this is a major consideration.
At Brightstar Financial, as a leader in this sector, we are naturally fully insured and able to give partners with whom we work the utmost confidence that they are delivering their clients the best possible outcomes, with the best possible support.
The bridging market is growing, but there is plenty of potential that remains untapped. By working with a specialist distribution partner, you can help to realise that opportunity.
