LG: correct. FA: no. GL: it’s a specialist area. A traditional bridge is 12 months or less. new entrants have evolved the market to encompass something completely different so it’s that medium-term lending which is a different kettle of fish - something truly different from bridging.
Will more “mainstream” lenders enter the bridging sector?
LG: the bridging sector always attracts new entrants - it’s expensive money and new entrants keep everyone on their toes. it gives brokers and clients more choice and that has to be a good thing.
At the moment the sector is particularly attractive and the opportunities far superior than pre- credit crunch. AC: this market is going to behave like any market. the laws of economics mean it will attract more lenders because it’s growing. it’s a virtuous circle. the actual threat is not new entrants, if you look at where the money is coming from, it’s a lack of liquidity or lack of interest by banks who are predominantly dealing with the high net worth clients and the big risk is when they decide they get back in, that’s when it’s going to get interesting. LG: the market does go in cycles. Within the next five, seven years, some lenders will come back to their work four or five years ago, that’s bound to happen. i think you’ll find that it gets even tighter virtually immediately within
this quarter to the next quarter, i don’t think there’s any doubt about that.
Is the shot-term market getting bigger?
Paul Brett: Yes absolutely. the wider discussion on that comes back to the point on broker education. Brokers and intermediaries are looking at other areas of finance to ensure they are meeting customers’ demands and making sure their businesses continue to grow especially in difficult times. From our perspective we believe the market is growing and we’ve seen evidence of that fact. Brokers are looking at short-term finance as part of their portfolio of products Pete Turner: From a packagers point of view, it’s looking for the options to find solutions. that’s what we need to do and the more lenders that come in and come back up the terms and service will only help. PB: it’s a tougher world out there and brokers have got to add value. no longer can they be order takers, just processing deals. they’ve really got to add value to their client base to make sure they do well. AC: Well you can see growth. the buy-to-let market looks like it’s going to gain some strength over the next cycle because i don’t think it’s funding that’s the problem. that market was £44bn, its £12bn today and probably should be £20bn before it becomes dysfunctional again. Just that strip could fuel quite a significant growth in our market over the next few years so i think that’s highly likely to take place. there are of course other areas that
could come alongside but we certainly see this as a growth story for this market for the next five to 10 years.
Garry Bailey: When you look at the growth of the market there are three fundamental factors: new entrants, new funds and education. When you look back over three, f our years ago, a lot of packaging brokers didn’t even consider bridging as an option. now we look at it and with the likes of Precise, Bridgebank and omni etc, you see that you get a panel of lenders now which has predominantly was always in the mortgage and security bond market. one time it was all very specialist.
Do you think the market has grown in the last 18 months?
Geoff Philpot: High street lenders are trying to lend as little as possible and are trying to put up barriers all the time. Bridging finance did appear to fit into a fairly predictable but very worthwhile sector of the market. now to get a client you’ve got to give as much information to a bridging lender as you have to the likes of royal Bank of Scotland or Lloyds bank and the whole thing has turned on its head! LG: You can’t underwrite bridging loan now just on the property knowing fine and well that there’s so much liquidity out there it doesn’t matter who judged their remortgage. it may well be dead and buried. You have to underwrite to the nth degree and that’s where experience and skill of the established lenders and the new entrants with the right teams comes in.
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BriDging introDucEr july 2011 25
27/06/2011 18:42
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