January can be a depressing month. The indulgence of Christmas and New Year gives way to pledges of abstinence and resolutions that may or may not last into February. The weather is often unrelentingly bleak, summer trips to sunnier climes seem a long way off and the longer-than-usual gap between payslips adds to the bad vibe.
This combination of dispiriting factors has led, in some quarters, to the third Monday in January being branded as the most depressing day of the year, or ‘Blue Monday’, to give it its full, pseudo-scientific title.
But while January can be something of an ordeal, it is also the perfect juncture to review the year that has just passed and hazard a guess at what is to come in the year ahead.
The bridging sector went from strength to strength in 2014. The West One Loans bridging index shows the market swelled to more than £2.4bn by the end of October, meaning the final figure for 2014 is likely to be north of £2.5bn.
The latest annual rate of growth equates to around 26 per cent and, while this is far shy of the 60-70 per cent seen in 2012, the market is bigger now and has moved into the next phase of its development, where volatility has been traded for stability.
Continued growth is to be expected in 2015, probably at a similar rate to that witnessed in 2014. All in all, the bridging market should surpass £3bn this year – an incredible milestone.
Part of this expansion is likely to be occasioned by bigger players going from strength to strength while some smaller operations become marginalised.
We saw from our own acquisition of West One Loans in 2014 how such mergers can really kick growth into the next gear and it would not be surprising to see some similar strategic activity in 2015. There seemed to be a degree of controversy when our acquisition of West One was announced but the early stages of the relationship have been seamless from our point of view, with both firms carrying on operating as before.
While headline bridging rates are already low, the race to the bottom has probably gone as low as it can. But that does not mean that lenders will not be seeking cheaper capital in 2015 so that they can try to pass on competitive rates to brokers.
We could see some new players enter the market as bridging enhances its reputation, although they are unlikely to immediately challenge the existing hierarchy.
What will also be interesting to note is whether the diversification undertaken by some of the more established lenders will lead to them taking their eye off the ball in terms of bridging. If that is the case and if they are not attentive to the evolving needs of the market, they could lose market share.
Also of interest is that while the bridging market goes from strength to strength, the mainstream mortgage market seems to be operating in fits and starts. After a promising first half of 2014, activity tailed off in the latter part of the year, with the latest Council of Mortgage Lenders stats showing decreases across the board.
Annual improvements are still robust but mortgage lenders have maybe found the Mortgage Market Review more of a challenge than they anticipated.
By contrast, bridging lenders have traditionally been able to take an individual approach to each case rather than adopt blanket policies across the board, which may be why they have been able to continually increase activity while high-street home lending has proved rather more inconsistent.
High-street lenders have long been unable to satisfy the needs of property developers and bridging lenders will continue to help take up the slack.
The bridging market seems set fair for another promising year and has an important role to play in supporting wider economic growth, particularly on the construction and development front.
Personally, 2014 was an exciting year for Enterprise Finance with both the acquisition of West One Loans and continued growth. We see no reason why we cannot be similarly successful in 2015.
January may be typically a disheartening month for many reasons but there is plenty to look forward to professionally throughout the rest of the year on the bridging front.