CFI: Bridging
Purple patch by
Award winning Commercial Mortgages.
Martin Kearns, head of strategic policy, Tiuta
aldermore.co.uk/intermediaries
FOR INTERMEDIARY USE ONLY - Aldermore Bank PLC is authorised and regulated by the Financial Services Authority for deposit taking and regulated mortgages. Registered Office: 1st Floor, Block B, Western House, Lynch Wood, Peterborough PE2 6FZ. Registered in England no. 947662
ACM10-0312-200013
It is clear from anecdotal evi- dence and the sheer volume of cases we handled towards the end of 2011 that the bridging sector is enjoying something of a purple patch and the latest index pub- lished by West One confirms this phenomenon. Its figures suggest that gross lending was 110% high- er in 2011 than 2010, mean- ing the total amount in- creased to £911m last year. I would hazard a guess that this is a slightly conservative estimate when it comes to bridging and that we are ac- tually over the £1bn already. The index also suggests the number of loans being advanced was 62% higher than in the previous 12 months and net lending was up 76% over the same period. We might therefore suggest the performance of the short and medium-term loan sector surprised even the most hardened optimist in 2011. It wasn’t just the number of cases that kept things tick- ing over, but according to the index the average loan size increased by more than 28% which provided the ultimate boost, suggesting that inves- tors are displaying the appe- tite for ever more ambitious projects. It is also no coincidence that the increase in bridging lending has occurred simul- taneously with the buy-to-let
44 MORTGAGE INTRODUCER APRIL 2012
renaissance. With high-street lenders still hamstrung by funding constraints, bridging lenders have stepped in to keep pace with demand from landlords. This is evidenced in the in-
dex by the fact that 84% of all bridging loans in 2011 were to residential property inves- tors, up 14% from 2009. This shift in focus towards the pri- vate finance sector further dispels the myth that bridg- ing loans are only suitable for those purchasing at auction and shows the true versatility and range of uses for the loans.
Bridging loans are also more attractive than conven- tional mortgages in terms of the loan to value amounts and interest rates on offer. LTVs have risen steadily since the beginning of 2010 – peaking at 50% by Q4 2011 – reflecting the strong credit performance of loan portfo- lios and the increasingly large loans investors are seeking. Interest rates are also more
favourable for investors, with the average bridging rate de- clining from 1.64% to 1.41% over the 12 months to De- cember 2011. All this adds up to a pretty promising picture for the bridging market and there is no reason to expect this steady growth to be halted anytime soon. With many in- vestors still giving the stock and bond markets a wide berth since the global finan- cial crisis,
alternative asset
classes like bridging are pro- viding a solid return and rep- resenting an attractive prop- osition to funders.
www.mortgageintroducer.com
Bank. British
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