Bridging In-depth
Behind the bridging buzz
Bridging is in vogue and short-term lenders are clamouring for brokers to bring them business. Sarah Davidson takes a look at the mortgage industry’s little brother
In a tight credit environment there are inevitably more situations where short-term money can be a good option for many borrowers. And as demand for bridging loans and short-term lending has risen so too has competition between suppliers. The knock-on effect has been a keener eye on this market from the regulator’s perspective and a general brushing up of the way the bridging game is played by lenders and brokers alike. Coreco’s communications director
Andrew Montlake acknowledges that there has been a mini-boom in the short-term market, which he sees as a direct result of restricted funding in the mainstream market. “What has surprised me is the number of ‘normal’ clients asking about bridging,” he says. “It’s seeping into consumer consciences. There is a bit of a danger there because they don’t necessarily understand what they’re asking about. Having said that, bridging is a useful tool in our armoury. “A few years ago bridging was a
6 BRIDgIng InTRoDuCER July 2011
shady, mysterious thing that no-one really understood with sky high fees and lots of money changing hands but the whole thing has completely changed. It’s become much more professional.” Mike Lawton, mortgage director at
John Charcol, agrees. “Bridging was such a small part of
what we did back in 2007 we didn’t even look for that business,” he says. “The demand has grown since then. We treat any type of lending as regulated so we want to deal with lenders that will treat the client as we have introduced that client. That doesn’t reflect the entire market but the bigger lenders that have come into the market are forcing the peripheral bridging lenders to become more professional I think.” Danny Waters, chief executive at Enterprise Finance, says there’s no doubt that a more professional bridging industry is down to new entrants. “A lot of these lenders are backed by large finance houses and banks that require stricter policies and processes to be in place than
the smaller players in the market before. Pending regulation has also meant that bridging lenders have moved to be more professional.” There is certainly a pervasive feeling that what was once seen as the wild west of the mortgage market has cleaned its act up considerably in recent years. Ray Cohen, a specialist
compliance consultant and director of Jackson Cohen, explains that despite the fast growth of this market, albeit from a small base, he doesn’t see bridging as a flash in the pan reliant on a stuttering mainstream market. “I don’t think this pick-up is temporary,” he says. “Credit markets won’t be as free flowing as they were pre-crash for many years. The days of quick mainstream mortgages are gone and that means there is borrower demand. The other side to that is bridgers will have to accept a lot more of the business they do will become regulated.” Robert Sinclair, director of the Association of Mortgage
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