Bridgingwatch

The Budget announcements about Help to Buy notwithstanding, bridging and secured loan finance lenders remain well placed

Kit Thompson MS blog

The big news recently has obviously been Chancellor George Osborne’s Budget announcements about Help to Buy, it seemed prudent to start by looking again at the ways in which bridging and secured loan finance lenders continue to fill the funding void, where other more conventional lending institutions are still retracting.

Two more high-street lenders joined the growing number of lenders to withdraw from interest-only.

HSBC no longer offer interest-only to regular borrowers, reserving this privilege for the premier banking customers only, while Yorkshire Building Society has withdrawn from offering interest-only completely across all of its brands.

Then the Council of Mortgage Lenders revealed that gross mortgage lending is down, with February’s gross lending figure reported as being the lowest monthly total since April 2012 when it stood at £9.9bn.

It was hardly surprising then that the FSA published the results of its review for barriers to new entrants to the banking sector, which has relaxed regulatory requirements to stimulate competition and hopefully encourage new, additional banks to come to market.

This review, in collaboration with the Bank of England, sets out significant changes to regulatory requirements and authorisation processes which, taken together, will reduce some of the regulatory barriers to entry into the banking sector and, as a result, enable an increased competitive challenge to existing banks.

And then we had Osborne’s announcement of the Help to Buy scheme in the Budget. Expectations for the scheme are high and the Government’s projections for both parts of the scheme are ambitious, with a total of £130bn of lending promised, to aid some 100,000 would-be homebuyers, which should generate in the region of 200,000 additional mortgage approvals each year, for three years.

Will these latest announcements be the answer our prayers and provide the mortgage and housing markets with the much needed cash injection it needs to recover?

Given the very limited success of former schemes, I very much doubt it.

Against this gloomy backdrop then, the data out over the last month from the bridging and secured loan industry has been a ray of light.

Lending for secured loans and bridging finance is thriving and up month on month.

Secured loan lending topped £31.6m in February, an increase of 21 per cent on the £26m figure recorded in February 2012.

Helped along the way by Shawbrook Bank completing their largest-ever secured loan to date at a staggering £330,000.

In fact, February’s gross lending figure was actually the lowest monthly total since April 2012 when it stood at £9.9bn.

It is evident that bridging funders are adding much needed liquidity to the economy and are helping housebuilders fund and finish developments and keeping sales chains moving forward to completion as well as funding for property investors. With the main stream banks still retreating and still licking their wounds, it begs the question – how much worse would things be if these once so called last-resort lenders were not there?