We have observed a significant rise in regulated bridging finance in terms of both applications and completions in the second half of 2016, which is continuing into 2017.
The reasons for the increase are several, and all concern the problems faced with the house buying process, supply shortages and rising house prices. Despite mortgage rates staying low, many are finding themselves in a race to complete on a house or risk losing it, leaving a regulated bridging contract as one way to secure their dream house.
There’s also another type of borrower becoming increasingly active in the bridging market and they are empty nesters, desperate to downsize to smaller houses but getting caught up in the lengthy buying process with delays or competition from other buyers, often meaning losing the house they want to buy.
Occasionally there are delays in a customer selling their property as rising house prices have priced many younger buyers out of the market, or simply the time it takes for the vendor’s onward purchase to complete puts their new purchase at risk. Either way, a regulated bridge can help bridge the gap and unlock the properties to allow completion to take place.
This changing market also opens up another option for broker and financial intermediaries to offer a first charge bridge to their property purchasing clients. This is now being seen as a useful extension to their service offering and ability to resolve increasing problems in the market. We can help brokers throughout the process, ensuring there is a suitable exit to the bridge and ongoing longer term funding for the property.
A regulated bridge can help many different types of customer as, in this market, the speed at which they can complete is crucial to buying the house they have set their hearts on. Buying at auction, self-build, downsizing, or buying their dream home, they can all be made quicker and easier with a regulated bridge and these loan purposes have helped boost activity.
Bridging rates are low at the moment with high LTVs also being offered by many lenders and so this form of finance isn’t as expensive as it was a few years ago, opening up new opportunities for brokers to offer a different route to funding the initial property purchase.