Many bridging lenders have their own funding, unaffected by either the EU referendum or the Bank of England.
According to many commentators, the Bank of England lowered interest rates too soon.
A lot of big decisions being made at the moment are happening in anticipation of what may happen next, not because the business or economic environment has changed at all. But Prime Minister Theresa May has stated that Article 50 will be invoked by the end of March, at which point we should know, at last, what we are working with regarding Brexit.
When it comes to the bridging world, demand has continued to climb and shows little sign of slowing down. Data for Q2 from the Association of Short Term Lenders showed loan applications increased by a huge 63 per cent. Many of the completions should be seen this quarter when the figures come out at the end of the month.
Bridging can often be counter-cyclical, with volumes increasing as traditional funding dries up. In recent years, however, the bridging market has risen alongside the mainstream one. Very little funding for bridging loans comes from the money markets, so the base rate cut has not affected the majority of rates; these are influenced more by competition in the market.
And increased competition is already emerging. Indeed, there is a diverse range of lenders in the bridging market, many with their own funding not affected by either the EU referendum or the Bank of England’s actions.
While demand for short-term funding remains strong, the industry is still incredibly healthy, providing solutions for developers, refurbishers and businesses, as well as the more traditional bridge between the sale and purchase of residential property.
Jonathan Sealey is chief executive of Hope Capital