Comment
Competition noise isn’t necessarily a boom
More competition means a smaller slice of pie but the size of the pie may be growing as it becomes more professional
three years or so floundering? After all bridging lenders are in
by Fahim antoniades, group director, Mortgage Centre IFA
much has been said about the current competitive state of the bridging market. the last year has seen a flurry of new entrants to the market as well as feverish activity on part of the more established players. the media hasn’t been slow in recognising the activity either, with articles and news clips appearing on a regular basis reporting the apparent “boom” in bridging activity. Perhaps one indication of growth
is the fact that trade bodies have shown an increase in membership. However, some such as tiuta’s
gareth Lewis have recently questioned whether the alleged boom is indeed a genuine one or just a hyped-up media phenomenon. this brings in to question a few fundamentals: just how much volume is being lent out there; what’s in store for the future of bridging moving forward and how sustainable is the sector going to be?
optimism v realism According to West one, the estimated size of the sector will see gross loans breaching £1bn by the summer of 2013. How though are bridging lenders able to show such confidence when the rest of the mortgage industry has spent the last
the business of lending short-term money, which means they rely on other mainstream lenders as well as a buoyant property market for exit. given that neither the property market nor mainstream lending is buoyant one would expect for the bridging sector to suffer correspondingly. it would be useful to draw on
historical data to see how lending volumes have fared over the years but historically, the sector hasn’t been as organised as it is now and for this reason data is difficult to obtain.
Competition not volume However, perhaps the harsher market conditions have been the catalyst to move the sector away from the cottage industry it used to be and forced the main players to become more aggressive in promoting and acquiring new business. this, i suspect, has had
Lender
dragonfly Property Finance Private Funders
Lancashire Mortgage corporation West one Loans tiuta plc cheval
united trust bank
commercial Acceptances omni capital Masthaven
bishopsgate Funding Source: MCIFA
more to do with the upsurge of bridging lenders than anything else. We now have professional
business development teams – the Likes of Liz Locke at omni capital, elliot Hyames at dragonfly, gareth Lewis at tiuta and Manish babla at West one – competently promoting their offerings to the mainstream community whereas before business development teams were less than visible. in the table is a snap-shot of
lending volumes during the month of June. of particular note are dragonfly and Private Funders who between them are responsible for over 46% of cases and nearly 60% of volume. Also of particular note are omni which, as a newcomer, has already debuted on the table as one of the preferred choices by intermediaries. We have witnessed a coming of
age where the lenders themselves have done much over the past year to get the word out and create more business for themselves.
Cases (%) Volume (%) Volume (£000) 23.26 23.26 22.09 10.47 3.49 8.14 2.33 2.33 2.33 1.16 1.16
30.72 28.52 17.93 7.81 5.06 3.04 0.69 1.09 2.48 1.97 0.7
9,910 9,198 5,785 2,518 1,632 980 224 350 800 635 225
bridging introducer september 2011 17
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