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Bridging could assist with rush to complete before new SDLT deadline

The extended stamp duty deadline is expected to galvanise additional interest in bridging, according to Vic Jannels, chief executive of The Association of Short Term Lenders.

The average time it takes to sell a property has now risen to 295 days, as outlined by GetAgent.

As a result, it is believed bridging will help to ease the pressure on mainstream lenders and allow people to complete transactions ahead of the extended deadline.

Jannels said: “There are likely to be customers, who were unable to meet the first deadline, who will look to bridging to help ensure they hit the next one.

“Generally, a number of the term mortgage lenders are running well behind on service, while most of bridging lenders are still able to move quickly as long as their clients deliver the obligatory documentation in a timely manner.”

Jannels went on to say that while there have been stories of the average time to reach a bridging completion increasing, he does not believe this should distract intermediaries from the fact that, bridging lending can complete in just a matter of days.

This is provided that supporting information is supplied upfront and valuations and conveyancing are lined up correctly.

Chris Oatway, also believes that due to the increased transaction levels, he expects more bridging finance to be required.

However, Oatway said: “I am not sure to what level this will be directly linked to the deadline date.

“If it looks like a transaction will take longer to complete, I think it is more likely that a purchaser will try to negotiate on the purchase price rather than switch their funding strategy to bridging finance due to the additional costs.”

Jannels went on to say that at the ASTL, they have worked together with other trade associations to call for a change to the hard deadline that was originally scheduled for 31 March.

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He added: “It has been clear for some time the number of transactions being processed through the system has put every business involved in the process under immense pressure and that many transactions would not hit the original deadline.”

The consequence of this would have been many transactions falling through and many customers liable to bigger tax bills than they had planned for.

Jannels outlined that the extension of the full relief until the end of June will be positive news for transactions currently in the system and the inclusion of partial relief until the end of September will prevent a significant cliff edge as we faced in March.

Although Jannels noted that the maximum potential saving drop from £15,000 to £2,500 at the start of July, therefore he outlined the risk of a second another rush to beat the deadline at the end of June.

Looking to the rising use of bridging, Oatway explained that there is a “buzz” within the market at the moment and transaction levels have begun to increase.

He said: “With a renewed appetite to lend and a positive outlook in regard to the economy and liquidity remains as high as ever, I can only see the industry going from strength to strength.

“Property will always be a great inflation hedge – as well as being free from capital gains tax – and so, with the overall increased desire for outside space, we continue to expect transaction levels to remain high for the year ahead.”

By Jake Carter

Source: Mortgage Introducer

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Bridging Completions Fell But The Value Of Applications Increased

Bridging completions were £2.88bn in 2020 having fallen 27.9% from £3.99bn in 2019, according to the Association of Short-Term Lenders (ASTL).

The data also outlined that bridging loan books dropped to £4.48bn, a decrease of 2.5% on the previous year.

However the value of applications in 2020 increased to £25.82bn which is up from £23.19bn in 2019, representing an 11% rise.

According to the ASTL, the surge in applications in Q3 last year was accountable for the 34.9% increase in completions in Q4, totalling £918m of completions.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

Applications in Q4 2020 were at £6.69bn, a quarterly decrease of 12.7%, however they were still up by 22.9% on the same quarter in 2019.

Meanwhile, average LTVs fell slightly in Q4 and have now dropped to below 59%.

The value of loans in default in Q4 2020 increased by 13.9% on Q3, and was 23.8% higher than Q4 2019.

Vic Jannels, chief executive of the ASTL, said: “The Q4 lending figures give us an opportunity to review the performance of 2020 as a whole.

“Bridging completions were down on the previous year, which is to be expected given the periods of national lockdown.

“However, applications were actually higher than in 2019, which reflects the enormous potential the bridging market has to provide customers with a funding solution through these difficult times.

“We must, however, remain cautious.

“The effects of economic slowdown are starting to be reflected by the value of loans in default and, while the roll out of the vaccine for COVID-19 continues at pace, a return to normal levels of economic activity seems unlikely before the summer, so these trends may persist for several months.”

By Jake Carter

Source: Mortgage Introducer

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Bridging market showing encouraging signs of activity

The bridging market is showing encouraging signs of activity as investors look to add value or yield, according to the latest Bridging Market Bulletin from Shawbrook Bank.

The bulletin delivers a snapshot of the latest trends and outlook for the UK bridging finance market.

This optimistic picture is reinforced by recent state of the market data from the ASTL which showed bridging applications hit their highest ever level in Q3 2020, and completions rose by more than 40% as the market bounced back following the first lockdown.

In an analysis of the market, Shawbrook observed the trends driving demand which included a buoyant auction market, an uptick in heavy refurbishment projects and investors capitalising on the stamp duty holiday.

Emma Cox, sales director at Shawbrook Bank, said: “It’s been a difficult time for the property market, and of course the current landscape has left many facing challenges – especially within the bridging space, where some lenders had to halt business in this area for a period of time during the height of the pandemic.

“It is positive to see many of these lenders recently return to market, and as our report shows, to see that the housing market is moving again.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

“Whilst some of this activity in the bridging market will no doubt be down to the releasing of pent up demand – something that Rishi Sunak’s stamp-duty holiday will support further – we are also seeing an uptick in investors looking at alternative strategies to sure up investments.

“The use of bridging to carry out refurbishments and conversions, as well as to aid chain breaks due to elongated sales processes, is an essential funding option that can support lucrative investment opportunities.

“We recently announced revised pricing across our bridging range, with rates now starting at 0.5% for both regulated and unregulated products, in order to show our continued appetite to aid brokers in making the most of these opportunities.

“The bridging market has demonstrated remarkable resilience throughout this year and, as much as we may face more challenges towards the end of 2020 and into the early parts of 2021, we believe this adversity may create opportunities for investors, and brokers, which Shawbrook plans to continue to support as much as possible”.

By Jessica Nangle

Source: SFI

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ASTL: Bridging applications leap to record levels in Q3

Activity in the bridging market reached record levels in Q3 with completions rising by over 40% and applications hitting an all-time high, the Association of Short-Term Lenders (ASTL) has revealed.

The latest figures from its members show applications totalled £7.6 billion in Q3 2020, representing an increase of 39.1% over the previous quarter and an increase of 25.7% on the same period in 2019.

Completions in Q3 2020 were £680 million, which was an increase of 44.8% on Q2, although still down by 27.6% on the same period last year. This reflected the influence of the first national lockdown on the previous quarter’s originations activity, the ASTL said.

Loan books showed a small increase of 0.6% on the previous quarter and 5% on the same period last year – remaining at around £4.5 billion. While average LTVs increased slightly since Q2, but continue to remain at sub-60%

The value of loans in default showed a small increase of 3.3% over Q2 2020 but were 23.1% higher than the same period last year, as borrowers continued to feel the financial impact of the pandemic.

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Vic Jannels, CEO of the ASTL says: “The Q3 lending figures from the ASTL reflect feedback from the market demonstrating that this has been a hugely busy period for bridging lending.

“Applications over the quarter totalled £7.6 billion, which is the highest figure we have ever recorded. Completions also bounced back on the previous quarter but remain down on last year as an overhang of the first national lockdown.

“We’re unlikely to see this overhang again as the market remained open during the second lockdown – but we must still remain cautious about the future, as the road ahead remains full of economic uncertainty.

“That said, if the recent positive news about vaccines come to fruition and lenders continue to underwrite loans sensibly, whilst taking a proactive and collaborative approach to customers in default, then there is no reason why this quarter’s figures should not prove a strong foundation for a robust and sustainable recovery.”

Source: Mortgage Finance Gazette

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Bridging volumes rise in ‘buoyant’ short term loan market

There has been a 46% increase in gross bridging loan volumes in Q3 2020, as the sector recovers from the Covid-19 lockdown.

According to the latest Bridging Trends reports regulated transactions continued to dominate the sector while the average interest rate fell in line with pre-Covid-19 levels.

There was also a rise in demand for regulated refinance, according to the quarterly report produced by short-term finance lender, MT Finance.

The report revealed contributor lending transactions totalled £115.52 million in the third quarter of 2020.

Although lending figures were 35% below the pre Covid-19 levels of £180.94 million, they had risen significantly (46%) from the £79.4 million of bridging loans transacted in the previous quarter. This highlighted the impact of Covid-19 restrictions being eased.

MT Finance’s report showed regulated bridging lending continued to dominate the sector in Q3 at an average of 53% of all lending, compared to 47% of unregulated transactions.

It said the average weighted monthly interest rate in Q3 decreased to 0.78% from 0.85% in Q2. This fell back in line with rates offered before the Covid-19 outbreak (0.75%).

Meanwhile, average LTV levels in the third quarter increased to 51.7%, from 48.8% in Q2. This was likely attributed to borrowers turning to bridging finance as mainstream lenders continued to tighten their maximum LTV restrictions.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

Demand for second charge lending dropped significantly, accounting for an average of 17.7% of total market volume in Q3 – down from 26.1% in Q2.

For the eighth consecutive quarter, the average term of a bridging loan remained at 12 months while typical completion time increased from 50 to 52. This could be attributed to operational capacity issues, the report said.

The most popular use of a bridging loan remained the same as the previous six reports – to purchase investment property.

Gareth Lewis, commercial director at MT Finance, said: “The stamp duty holiday and rising house prices has ensured that the market remains busy and it has been well publicised that the mortgage market is currently feeling the strain when it comes to delivering acceptable processing turnaround times, which can add to an already stressful experience.

“Luckily, bridging finance is a useful tool for brokers to help unlock a transaction for a client allowing them to meet deadlines.

“Given the stress on a chain, presented by the slow processing times, it is unsurprising to see more clients turning to regulated bridging finance to support their purchases.”

Craig Hardiman-Scott, senior associate at Sirius Property Finance, said: “Customer demand is extremely high, so it comes as no surprise that the short-term loan market continues to be very buoyant from developer exits through to business capital injections to name but a few.

“Those with competitive rates, products, and service that have been able to adapt their offerings throughout the pandemic are well placed to continue seeing the benefits.”

By Kate Saines

Source: Mortgage Finance Gazette

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ASTL: Bridging market is open for business

The bridging market is still open for business but communication is key to help customers identify the best options for their borrowing situation, according to the Association of Short Term Lenders (ASTL).

Vic Jannels (pictured), CEO of the ASTL, said: “It’s at times like these when the resilience and innovation of the short-term lending sector comes to the fore.

“We have seen lenders introducing new technology and processes to ensure they are able to continue to deliver vital funds for customers, and even received new membership enquiries for the ASTL.

“At the same time, lenders have been working proactively to engage with their existing customers to identify the most appropriate course of action for their circumstances.

“There will certainly be some customers who are experiencing financial distress as a result of the COVID-19 crisis, and our immediate guidance for these customers is to speak to their lender as soon as possible, so that you can work together towards a solution.

“Notwithstanding the above, it is important for all borrowing customers to remember that they have a contractual responsibility in relation to the interest payments due, subject to the terms of the loan, and to redeem their loans at the appropriate time.

“Lenders will always be willing to have a conversation with their customers and look to be supportive whenever possible. The current pandemic, however, is no reason to simply ignore your obligations and stop making payments or refuse to communicate with your lender.

“Bridging lenders work tirelessly to engage with customers in genuine difficulty but they, in turn, have their investors and funders to consider and, in turn, do not want to be in breach of their commitments.

“So, our guidance for all customers is to talk immediately to your lender if you are experiencing financial distress. There are often sensible options and ways forward, but these can only be identified by working together.”

By Ryan Fowler

Source: Mortgage Introducer

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Bridging lending up by nearly 20% in 2019

Bridging loan books grew to £4.5 billion in 2019, an increase of 19.7% compared to 2018, according to figures compiled by auditors from data provided by members of the Association of Short-Term Lenders (ASTL).

Completions in Q4 2019 reached £1.068 billion – an increase of 13.7% on Q3, while average LTVs continued to remain below 60%.

However, applications in the final quarter of 2019 fell by 10.7% on the record-breaking previous quarter.

The value of loans in default grew by 13.2% in Q4 2019 from the previous quarter.

Vic Jannels, CEO of the ASTL, commented: “The value of outstanding bridging loan books jumped significantly last year driven by both an increase in new business and a trend for borrowers to take bridging finance over longer terms.

“We did see a fall in applications in the final quarter of 2019 compared to the record breaking Q3, but in the context of both a December General Election and Christmas, this is perhaps unsurprising.

“There is, however, reason to be cautious. The value of loans in default has continued to rise, and there is some evidence that repossessions are also increasing, so it is important that lenders maintain responsible underwriting and collections practices alongside their appetite to continue to grow their lending.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Six Ways To Use A Bridging Loan

A bridging loan can essentially be used for any legal purpose, however, they are usually used as part of a property transaction. As the name suggests, bridging finance is used to ‘bridge’ a gap in a person’s finances before an alternative source of funds becomes available, or before a longer-term finance option can be arranged.

Using an online bridging loan calculator is the best way to understand if your project is viable and what it would cost you if you were to take out bridging finance.

This article outlines the most common uses of a bridging loan, as well as some of its benefits.

Buy before you sell

The most common way a bridging loan is used by homeowners is to purchase their next home before selling their current one. This could be because their buyer pulled out last minute and they don’t want the property chain to break, or simply because their perfect home has come onto the market and they don’t want to miss it.

The bridging loan would be secured on your current property and used to purchase the new one. The bridging loan would then be repaid from the proceeds of the current property being sold later. As the maximum term for a bridging loan is usually 12, or 18 months, this will give you ample time to sell your property, even if it isn’t on the market when you take out the loan.

Buying a property at auction

Bridging loans are ideal for purchasing properties through an auction. Once a successful bid is made at an auction, the buyer has 28 days to complete the purchase which obtaining a mortgage within that timescale may be impossible.

As bridging finance can be arranged very quickly, as little as 48 hours in some circumstances, the loan can be used to purchase the property outright (sometimes with no deposit if you have other properties which can be used as additional security). The most common method of repayment in these circumstances is through re-financing (when you have arranged a mortgage, the money will be used to repay the bridging lender). Bridging finance can also be used if your intention is to purchase the property to renovate and sell on for a profit.

Renovate your home before selling

If you are planning to sell your home, but some renovations would significantly increase the value, bridging finance can be used to fund this.

The bridging loan would be secured on the property and then repaid through the proceeds when the property is sold.

Purchasing an unmortgageable property

Banks and building societies will deem some properties as ‘unmortgageable’ which means the property is unsuitable for mortgage lending. This could be for a variety of different reasons, but common reasons include the lack of a working kitchen/bathroom, it is above a commercial property or the lease is too short.

In these situations, the property is limited to cash buyers as those requiring a mortgage to purchase the property wouldn’t be able to do so. However, as a bridging loan can be secured on any type of property, one can be used to purchase the property and fund any repair works required to make the property mortgageable. The bridging loan would be repaid through re-financing when the mortgage is granted.

Inheritance tax and probate issues

Sometimes, when dealing with inheritance tax and other probate issues, large funds are required. This could be for paying tax and other bills, releasing charges on a property or even to pay off other beneficiaries. In these situations, property is usually sold to produce the lump sum required, however, there is often a time limit put on the sale and properties may be put into a forced sale position, an auction for example, meaning it’s likely that the best price won’t be achieved.

A bridging loan can be used to sort out any problems, provided there is a property for it to be secured against, and then repaid when the property is sold.

Repossession prevention

If a property of yours is due to be repossessed by a lender, a bridging loan could be used to pay off any debts secured against it, provided you have enough equity in this property, or another, for the loan to be secured against. This will enable you to regain control of the property and sell it on your own terms to be able to repay the loan, and avoid a forced sale situation where the property is unlikely to achieve its full value.

Benefits of using a bridging loan

There are multiple benefits to using bridging finance, some of which are listed below.

  • Fast to arrange — in some circumstances, the funds could be in your account within 48 hours. This is ideal for emergency situations, or times when you want to grab an opportunity.
  • No monthly repayments — with a bridging loan, the interest is added to the loan facility and repaid at the end of term with the capital, this means no monthly repayments are required.
  • Flexible lending criteria — as no monthly repayments are required, your income will not be assessed and most lenders won’t look at your credit history. As long as you have a viable exit strategy and you have sufficient security available, you should be able to qualify for a bridging loan.
  • Any property can be used as security — a bridging loan can be secured on any type property, including; houses, flats, bungalows, shops, commercial units, mixed-use properties, hotels, farms and also land and building plots. Bridging finance can also be secured on derelict properties, or those of a non-standard construction. You can also use multiple properties as security for one loan to lower the loan to value.

Source: Shout Out UK

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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