As MD of short-term lending at Masthaven, it’s been a positive year for the bank and the wider market.
With the Association of Short Term Lenders recently celebrating its 10-year anniversary, and with the bridging market now estimated at £4bn a year, we now sit in an evolving, mature and professional market.
So, if 2018 was the year bridging finance moved closer to the mainstream, 2019 could well be the year it hits the stage. What challenges could it present?
Awareness of the possibilities of short-term lending is growing, yet there is probably still some education to do, particularly for customers and brokers who are completely new to bridging finance. The perception that bridging loans only help homeowners buy properties, for example, is certainly not true – it is definitely a versatile, modern financing option for a whole range of borrowing needs.
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At Masthaven, we recognise the power of technology, and certainly use it across many of our business functions. But we value the human element far more. There is a lot of talk about the potential use of tech in lending decisions, particularly ‘robo-underwriting’, where risk assessment, affordability testing and decision making is done by a bot rather than a person.
It’s important to remember that bridging can be a specialist, complex product that requires someone with expert insight, great due diligence and a bit of out-of-the-box thinking to properly take on and underwrite cases, delivering the best outcome for the customer at the end. So, while some may champion the rise of the robots, we’ll still proudly fly the flag for the humans.
In 2018, plenty of new lenders stepped into the bridging market and there’s no reason this will abate in 2019. More bridging lenders is a good thing: it increases competition and brings rates down, which are both positives for our customers. But there is a risk of saturation, of too many lenders offering the same thing. This puts the onus on lenders to innovate, and I think the ones who will succeed will be those who have plenty of experience in the sector.
Overall, I’m very excited for the possibilities for bridging as we go into 2019. As a bank, we’re looking forward to launching some exciting new product innovations, and as a sector we look set to continue to thrive.