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Bridging loan applications up 17%

Bridging loan applications in the third quarter of 2019 were up almost 17% year-on-year standing at £6.1bn.

According to figures compiled by auditors from data provided by members of the Association of Short-Term Lenders (ASTL), year-on-year annual applications hit nearly £23bn while completions remained at more than £4bn.

Q3 completions stood at nearly £940m, a decrease of 2% on the same period last year, although year-on-year completions were up by 1%.

At the end of the third quarter, bridging loan books totalled £4.3bn, a reduction of 6% compared to last quarter, but an increase of more than 5% on the same period last year.

Benson Hersch, CEO of the ASTL, said: “This is another strong set of results for the bridging sector. Applications for loans have increased even more steeply than completions, with a staggering record £6.1 bn figure for Q3 2019.

“This can possibly be ascribed to intermediaries approaching more lenders, or to new lenders getting their part of the pie.

“Whatever the reason, there is no doubt that the sector is in rude health and estimates of total loans written for the year in excess of £6bn seem to be on the money.

“Year-on-year figures from the data survey show annual completions by members currently at more than £4bn, and they are on an upward curve.

“Back in September 2012, total lending was £885m, with the billion mark being reached at the end of the following quarter.

“This is my final set of quarterly figures as CEO of the ASTL, and it gives me a great sense of pleasure and achievement to leave the industry in such a strong position. It is not, however, the time for complacency.

“The wider political and economic environment remains uncertain and the challenge for the industry now is to continue this level of activity whilst maintaining high standards of underwriting and customer focus.”

By Ryan Fowler 

Source: Mortgage Introducer

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Bridging sector in ‘rude health’ according to ASTL

Applications for bridging loans soared in the third quarter of the year rising more steeply than completions, new figures revealed.

Data released today by the Association of Short-Term Lenders (ASTL) showed bridging loan applications increased by 17% when compared to the same quarter last year.

Indeed, year-on-year annual applications hit nearly £23 billion and completions remained at more than £4 billion.

However, it also revealed the value of completions in Quarter Three (Q3) dipped by 2% on the same period last year, to nearly £940 million. Year-on-year completions went up by 1%.

At the end of the third quarter, bridging loan books totalled £4.3bn, a reduction of 6% compared to last quarter, but an increase of more than 5% on the same period last year.

Applications for loans increased even more steeply than completions, with what the ASTL described as a ‘staggering’ record £6.1 billion figure for Q3 2019

Benson Hersch, CEO of the ASTL, described the data as ‘another strong set of results’ for the bridging sector attributing the rise in applications to either intermediaries approaching more lenders, or to new lenders getting their part of the pie.

“Whatever the reason,” he added, “there is no doubt that the sector is in rude health and estimates of total loans written for the year in excess of £6 billion seem to be on the money.

“Year-on-year figures from the data survey show annual completions by members currently at more than £4bn, and they are on an upward curve. Back in September 2012, total lending was £885 million, with the billion mark being reached at the end of the following quarter.”

These quarterly figures will be the last set Hersch will preside over as CEO of the ASTL, having announced his departure, which will be effective in the new year.

He added: “It gives me a great sense of pleasure and achievement to leave the industry in such a strong position.

“It is not, however, the time for complacency. The wider political and economic environment remains uncertain and the challenge for the industry now is to continue this level of activity whilst maintaining high standards of underwriting and customer focus.”

By Kate Saines

Source: Mortgage Finance Gazette

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Bridging lenders feeling confident about prospects for 2020

Bridging lenders are feeling positive about their prospects in 2020 despite the uncertainty created by Brexit and the forthcoming general election.

Nearly three quarters of lenders in this sector expect their business to grow over the next six months – far more than the 59% who were predicting growth in the last survey, conducted in June.

The survey, which quizzed members of the Association of Short Term Lenders (ASTL), was carried out just after the date was confirmed for the general election.

Despite this, more than 75% of those questioned were confident about the long –term prospects for the UK economy. Back in June just 50% shared this sentiment.

Competition and turnover

In the next six months, over half of lenders said they thought the market would grow compared to fewer than a quarter in June.

This also meant they expected modest growth in competition. However, competition from other lenders was no longer seen as the biggest challenge for them – instead it was the slow moving property market which was identified as the main hurdle by 55% of those questioned.

Brexit

The ASTL also revealed the number of lenders who would vote to remain in the European Union if there was a second referendum has changed since the beginning of the year.

Back in January, 75% said they would vote to remain, but now most lenders would choose to leave with Boris Johnson’s deal.

Benson Hersch, CEO at the ASTL, said: “Overall, our members are very positive about prospects for the UK, their own businesses and the bridging sector as a whole.

“Competition is expected to increase slightly in the next six months, but this seems to hold little concern for our members, and the downward slope in positivity has been reversed.

“It is hoped that the general feeling of positivity will turn out to be realistic and we look forward to a great end to 2019 and an even better year ahead in 2020.”

By Kate Saines

Source: Mortgage Finance Gazette

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Investor demand for bridging finance

This has been the case for the first three quarters of the year but in Q3 bridging finance for property development nudged down to 22% from 25% in Q2.

A traditional chain-break was once again the second most popular use for bridging finance, contributing to 20% of all lending in Q3, up from 18% in Q2 2019.

Bridging loans for business purposes fell from 12% to 6% in the third quarter.

The Bridging Trends figures are derived from lender MT Finance and specialist finance brokers Brightstar Financial, Capital B, Clever Lending, Complete FS, Enness, Impact Specialist Finance, Positive Lending, Y3S and UK Property Finance.

Bridging loan growth weakened in the third quarter, with transactions by the contributors to Bridging Trends hitting £181.64 million, down by £3.2 million on the previous quarter.

The number of regulated bridging loans within the report rose to 42% in Q3, up from 37.5% in Q2. There was a lower average monthly interest rate in the third quarter (0.74%), a decrease of 0.05% on the previous quarter.

Demand for second charge loans remained consistent at 18.4% in Q3, with average LTV levels at 53.1%.

For the fourth consecutive quarter, the average term of a bridging loan remained at 12 months. The average completion time on a bridging loan application in the third quarter increased by seven days to 51.

Gareth Lewis, commercial director at MT Finance, said: “Bridging loan activity for the third quarter remained stable, coupled with the most popular uses, is a good indication of strong demand from borrowers seeking to purchase property fast while prices are low, ahead of Brexit’s conclusion.

“It’s quite clear that the uncertainty of Brexit has had its effect on the London property market, with prices dropping significantly in many boroughs. This has prompted many property investors to utilise the speed of bridging loans to act quickly on opportunities.

“With the EU deadline now extended, it would be reasonable that we’ll see the same trends continue throughout the rest of the year.”

Andre Bartlett, director of Capital B Property Finance, commented: “We are still seeing strong demand for regulated loans for chain breaking etc for good clients, at low LTVs. The appetite for lenders for these types of deals remains healthy and rates continue to be consistently low and the competition is still fierce.

“The downside is average completion times for loans is heading in the wrong direction, but that may be due to matters outside of lenders’ hands. I would love to see the average completion time get down to below 40 days.”

Chris Whitney, head of specialist lending at Enness, added: “It is a buyers’ market right now, especially for international buyers who are also taking advantage of the weak pound.

“This, and suppressed prices due to the political uncertainty, means that many international buyers are picking up assets at over 20% lower than they might have been three years ago.”

By Joanne Atkin

Source: Mortgage Finance Gazette