Help-to-buy shoved aside by bridging

Help-to-buy shoved aside by bridging



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According to the latest West One Loans Bridging Index, when it comes to funding for new homes, alternative finance accounts for more than half of the amount Help to Buy provides.

According to the latest West One Loans Bridging Index, when it comes to funding for new homes, alternative finance accounts for more than half of the amount Help to Buy provides.

This news follows 32 per cent of growth in the number of completed bridging loans over a period of a year.

Commenting on the results, Duncan Kreeger, Director of West One Loans, said: “New homes are the fundamental fuel of a healthy property market – so the government and Bank of England are right to highlight the dangerous squeeze in the supply of property.

“But there are other ways to supply new homes. We need to make far better use of the buildings we already have.

“Help to Buy has a critical role to play in kick-starting brand new building sites – yet ground-up development is only one part of the finance that property professionals need in order to supply raging demand.”

Results also revealed that the government’s equity loans of £941 million were miniscule compared to the £2.38 billion figure of property bridging loans.

Duncan added: “Thousands of under-loved and under-occupied properties are still left waiting for refurbishment or conversion. Property developers and potential landlords just need the right sort of finance to get these empty offices or dilapidated blocks of flats to a decent standard and on the market. Flexibility is king – and government schemes can only do so much.”

Over the last 12 months, ending 1st May, the bridging industry provided annual gross lending of £2.06 billion, which shows a surge in growth to 17.9 per cent compared, to the previous year.

Results indicated that if lending carries on at this rate, then we will expect an annualised rate of growth of 10 per cent.

Duncan Kreeger said: “The bridging industry is still making hay – and the sun looks set to keep shining.
“Meteoric expansion in recent years is only the start of a new era. This reinvigorated industry has built a solid foundation for further growth.

“Certainly, as with all industries, such transformational progress must gradually steady. And bridging is already maturing, consolidating its enormous expansion.”

Duncan added: “Bridging is not suffering from any of the latest challenges afflicting the mainstream mortgage market. While the high street gets the jitters as incomes struggle to keep up with house prices, the best bridging lenders are in the business of solving this problem.

The index also revealed that the average loan size now averages at £457,000 over the twelve months to 1st May.  

However, loan to value ratios across the bridging industry have reached the lowest point on record, after a prolonged and consistent drop since the end of 2013.

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