Political and economic changes have enabled bridging to play to its strengths by doing what it does best – bridging the gap
Reports have shown the UK housing market is softening, particularly in London. But at the crossroads of change comes opportunity.
This is particularly true for the bridging finance market, which is evolving and creating more prospects with which brokers can help their clients.
During these times of instability and uncertainty, some traditional lenders may hit the brakes on funding larger developments, while a tightening mortgage market has also made it difficult for certain borrowers to obtain traditional buy-to-let or even straightforward mortgages.
Given this absence of conventional funding, it is no surprise that demand for bridging finance has increased. In fact, recent political and economic changes have enabled bridging finance to play to its strengths by doing what it does best – bridging the gap.
Flexibility and adaptability are here to stay, and those that are adequately equipped to meet the changing demands of the market will thrive.
I also think we will continue to see a rise in the number and success of privately funded principal lenders because they do not need to go to an outside credit committee to ask if they can lend the money.
Of course, one thing is clear: when it comes to bridging, managing risk by having a clearly defined and plausible exit strategy is key, and always will be.
A lender cannot facilitate a loan based on a speculative route. If the loan does not make sense, it is not responsible lending. However, just because the case may be unusual, it does not necessarily mean it is a bad one.
Due to low housing stock and the increasing demand for properties, it is only natural if people look at alternative forms of finance to meet their need for speed or flexibility.
That said, brokers must ensure they work with lenders they trust and that will look after their clients.
Jonathan Sealey is chief executive of Hope Capital