Comment
A bumpy summer abroad boosts UK bridging opportunity
Analysis of europe and the international markets may reveal opportunities for bridgers to get some action
by mike lawton, mortgage director, John Charcol
What a summer it has turned out to be. Looking back over the last
month or so we’ve seen a real risk of another banking crisis if the eurozone eventually implodes. A full-scale greek default will require some further write-offs but in the scheme of things the risk of it affecting the uK is relatively small. banks have had time to offload their holdings of greek bonds to the european central bank, albeit taking losses in the process. this will mean that losses will
be borne primarily by taxpayers in eurozone countries. However, the risk that either Spain or italy will also need help looks like it’s becoming increasingly likely and that is a whole different ball game. Particularly given that italy is the largest eu issuer of sovereign debt, with €1.8tn outstanding. if we should we see a default from
italy on their bonds, we should expect an impact on the uK banks given the historical interbank lending levels previously made and this may have an effect on the availability of funds to lend.
riots and rollerCoasters in the uK we have all seen the damage caused by the riots, particu-
larly in London and birmingham. this will have an impact on jobs, property values and potentially in the short-term deter lenders from lending in certain areas. the devastation caused was awful,
appeared to be without purpose and no doubt many of us in the financial services industry will be concerned whether the rioting was a one off or not. in addition we also saw stock
markets around the world crashing and again causing more turmoil as those with savings looked for investments that might offer them a safe return. Standard savings and deposit accounts are offering very low rates of return and with the issues arising in the last month, some may question the strength of investing in government bonds. the one piece of good news is
interest rates and it seems unlikely that we will see a base rate rise this year and maybe not even next.
short-term opportunity Analysts will no doubt be working out if we may be moving back into recession but the world does go on and people will always buy and sell houses and need funding. it is a good time to be a broker and a great time to be a short-term lender. Property investment can offer
great value for money, be that in generating an income from a buy-to-let and/or potential growth in value through refurbishment, development or long-term holding position.
16 bridging introducer september 2011 Leveraging property assets
to expand or build a property portfolio can work to a client’s advantage, as long as the risks are fully considered. it is vital that the broking community liaises and works with bridging lenders to create the lending solutions needed for today’s market. there are more short-term
lenders in the market and i am certain we will see more in the months ahead, particularly given the growing demand and return rates. What differentiates one bridging lender from another is always in the quality of service, professionalism and ability to provide certainty in a quick timeframe. From a broker’s perspective,
we welcome the competition between lenders making the cost of short-term finance slightly cheaper, though comparing pricing still isn’t as easy as the regulated mortgage market. i am sure this will improve in the near future, so we can treat customers fairly when recommending one lender against another. the current market may appear to
be difficult on the surface, however there are many great opportunities buying property at auction at competitive prices, opportunities to buy and refurbish a property or expand a portfolio. interest rates are highly
competitive, lenders want to lend and clients need and want to use a broker. the next few years will be tough, but rewarding.
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