Brokers expect an average of 45 per cent more bridging business in the next 12 months as mortgage rates are predicted to drop while LTVs rise.
Around 39 per cent of brokers asked as part of the latest West One Broker Sentiment survey expect mortgage rates to fall while 43 per cent expect there to be no change over the next 12 months. As many as 71 per cent of brokers expect their own bridging activity to grow over this same period of time.
West One Loans chairman Duncan Kreegar says: “Bridging looks set to expand steadily into 2013. A mild slowdown in the last quarter, as seen in our West One Bridging Index, indicated a moderation in the rate of growth. But these figures suggest a longer term pattern of consolidation. Brokers think bridging still has a long way to go, and this comes as traditional lending models have stumbled once again in August.”
Commercial bridging loans are said to be an area of growth for 93 per cent of brokers while 97 per cent say they have experienced an increase in residential bridging.
Kreeger adds: “The government is keen to stress the importance of increasing business lending, but can’t put its finger on where the money should come from. While the economy has shrunk, the number of small businesses has boomed – according to BIS, 60% of private sector jobs now come from SMEs.
“More bridgers are lending to people who can demonstrate a real business case but are shunned by restrictive practices at high street banks. In May, Lord Young’s report identified peer-to-peer and asset-backed finance as possible sources of business funding. He hit the nail on the head.”