Some may argue that this is why the specialist finance market has risen to prominence in the last decade.
If we look back to the credit crunch in 2007/08, investors and businesses faced immense uncertainty. Major banks had collapsed and suddenly the process of acquiring finance through mainstream lenders became complicated, bureaucratic and time-consuming. Amid this turmoil, bridging providers heeded the call by offering the market access to tailored, fast finance.
- Self-employed borrowers urged to talk to their accountant at a 'very early stage'
- MFS completes £1.2m second-charge commercial bridging loan
- MFS deploys £18m worth of bridging loans during lockdown
In the years that followed, the bridging sector grew to reach an impressive value of £4 billion. More recently, rising demand for bridging loans has resulted in an influx of new lenders, which made for an increasingly competitive marketplace.
Now, we find ourselves in a position similar to the credit crunch. Faced with a crisis of comparable proportions, albeit a health pandemic with economic consequences as opposed to a recession, the lending market has entered a new, transformative phase. I am pleased to say that while some of the big banks have struggled, the bridging sector as a whole has used the challenges to enhance its products and effectively serve the needs of its clients.
Filling the void left by the mortgage retreat
When lockdown measures were first introduced, it was reported that over half of all available mortgage products were taken off the market. Of those that were supporting an existing property transaction, buyers and sellers faced the risk of mortgages being denied or taking a lot longer to be deployed.
Property chains were at risk of collapsing. Yet in these trying times, bridging lenders stepped up to the mark. Established lenders offered tailored finance solutions and ensured loans could be completed within days of an enquiry being received, even in the most complex cases.
At Market Financial Solutions, we have deployed over £27m worth of loans since lockdown began. Of these, one of our standout cases was a £500,000 bridging loan to help a client in Northern Italy successfully complete on a property transaction in South London at the height of the pandemic. You can read more about the case here.
Bridging lenders are here to stay
With lockdown measures slowly easing, mortgage providers and big banks are once again returning to the market. However, they are returning to an environment that will never really be the same again. In the last few months, established specialist lenders have demonstrated the creativity, leadership and commitment needed to ensure that property transactions can continue unabated.
This will not go unnoticed; I expect there to be growing demand for bridging over the coming months, as buyers and sellers once again look to transact. Specialist finance providers have set an exemplary standard of how lenders should best handle a crisis by, above all, putting the interests of their clients and brokers at the heart of everything they do.