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Bridgingwatch – Rob Jupp – March 2012

A warm welcome to my second Bridgingwatch column and thanks for the various emails, some of support and others of abuse that followed my inaugural article.

It’s great to see such competition and passion out there but I will continue to write this article with a dignified, straight bet and focus on excellence in the sector.

My largest mailbag involved support from my industry peers for my comments on the disruptive role that many small private bridging firms are playing.

Of course there are exceptions, but as a whole lenders that won’t support and be licensed by trade associations such as The National Association of Commercial Finance Brokers, Association of Bridging Professionals and Association of Short Term Lenders are not firms that any of us should be recommending to our clients.

There will be no code of conduct, no standards of entry, no commitment to best practice and no redress.

When you have no peer group to self-regulate, you go back to scenes of the Wild West and our sector goes back a decade.

I’m sure the Financial Services Authority knows this and that it will feature in its future plans.

One of the biggest questions that is asked concerns the true size of the bridging market.

Perhaps the problem has been that there has been no accurate figure on this – that is until West One Loans produced its West One Bridging Index.

It doesn’t just look at the size of the market but also the way LTVs are trending, how large average loans are and how much rates are fluctuating.

Every quarter, West One analyses statistics drawn from internal management information, AOBP statistics and information made public by other lenders.

The findings from the index demonstrate how rapidly the bridging industry has expanded to fill the gap left by traditional high street lenders as they have retreated from the mortgage market since the financial crisis begin.

West One believes that last year gross lending amounted to £806m against a total mortgage market of £140bn.

Although in percentage terms, this only represents just over 0.57% of the total mortgage market, it’s interesting to see that West One believes the sector increased in size by a massive 46% in 2011.

If these trends continue, and judging by Q1 they certainly will, bridging will top £1bn in size for the first time in 2012.

A big well done to the team at Dragonfly Property Finance for scooping the 2012 Mortgage Strategy award for best short-term lender – an accolade it also won last year.

It’s testimony to Dragonfly chief executive Jonathan Samuels and his team that they have remained at the top of their sector.

But competition is such that 2012 will be a defining year for a number of short-term lenders and I predict that the 2013 award will be the most hotly contested yet.

Hot Schemes

Cheval has a pre-arranged auction deal. This is a drawdown product secured against an existing portfolio on a first or second charge basis.

Cheval, Precise Mortgages and Omni Capital all provide first charge bridging loans up to 75% LTV with a 180-day value.

Omni Capital Second charge bridging loan for London and South-East up to 75% starting at 1.2% per month, and loans of £3m-plus.

Lancashire Mortgage Corporation Will lend on land without planning permission up to 65% LTV.

Shawbrook Bank Offers rates at 0.7 % per month.

Deal makers

Precise Mortgages
Completed a £460,000 loan from Finance 4 Business for a cash injection into an applicant’s business over three properties – its first joint representation case with Goldsmith Williams Solicitors. This was completed in 10 working days.

Shawbrook Bank
Completed on a £1.5m bridge within five working days for a luxury residential property developer in Surrey. The deal was introduced by Capital Funding Consultants.

Masthaven
Completed a £750,000 bridge for Only Bridging where the security was a farmhouse with a 115 acre chicken farm.

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