How has the Bridging Loans sector performed during the pandemic in terms of demand/products etc and what we can expect post-pandemic.
There was a boom for the sector after the financial crisis – will we see the same when the pandemic ends?
Donna Wells, Director at F4B
There’s no getting away from the fact that the early days of the pandemic were tough for everyone in terms of stepping into the unknown, the logistical challenges from a business perspective, not to mention an element of widespread fear across the industry and from borrowers.
Thankfully, the ‘reopening’ of the housing market served to allay many of these concerns and, generally speaking, businesses operating in and around the property market should consider themselves extremely fortunate that they have been able to operate through the pandemic and that activity levels have remained so robust across the board.
On the whole, the bridging sector coped well throughout this challenging period, although some lenders emerged with more credit than others. Here at First 4 Bridging, we’ve had to pick up the pieces from a number of cases where introducers approached us after their client had been left in limbo by their original lender. Thankfully, a number of proactive flexible lenders were willing to step up to the plate and service the types of deals which could easily have resulted in huge cost implications for the borrower in question, through no fault of their own.
Many short-term lenders demonstrated their flexibility in extending facilities for borrowers who struggled to complete a suitable exit over this period and there was no huge fall in enquiry rates for short-term finance during this initial period. Demand quickly rose as the property market gained momentum and lenders gradually returned to the market with revamped product lines and customised lending, with some even looking to be a little more aggressive on the LTV front.
Looking forward, the benefits attached to short-term finance have been realised by a greater number of advisers and borrowers, a factor which will stand the sector in good stead moving forward. In terms of opportunity, we’re seeing strong demand from experienced property investors and developers who are taking a view that they can capitalise on some current indifference around the UK property market both pre- and post-the stamp duty deadline.
I’m not sure the term boom is an appropriate one or if I would like to go out on a limb predicting the future in such delicate economic times. However, for those operating in and around bridging and development finance there is certainly room for plenty of optimism and potential for opportunity moving forward. And let me just reaffirm that specialist distributors are better positioned than ever to support intermediaries and their clients in 2021 and beyond.