Major players weigh in on what Lehman collapse signifies for UK bridging market

Major players weigh in on what Lehman collapse signifies for UK bridging market




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This week has proved the most tumultuous for the global financial markets since the Wall Street Crash of 1929. Although days following the terrorist attacks of 9/11 and the 7th of June also resulted in the kind of drops in share prices we’re currently seeing, these were most definitely temporary falls.

 

 

 

What we’re experiencing now are serious, prolonged and widespread economic problems that will lead to, at best, recession and at worst, a total financial meltdown.

 

 

 

Black Monday saw the fall of major US investment bank Lehman Brothers, and in the coming weeks its effects on our lenders, employment levels and mortgage markets will become all the more apparent.

 

 

 

But how will the Lehman failure affect the UK’s bridging market? Here, several experts give their opinion on what’s in store for us in the following months.

 

 

 

Ryneveld van der Horst at Bridging Loans stated that Lehman Brothers bankruptcy was an “isolated incident” and therefore would not affect the bridging market directly, but the fallout from the crash would impact on all worldwide bridging companies. “The bottom line is the whole financial system is collapsing and there is less money floating around. Money is expensive, and will only get more expensive. There is zero liquidity in the market and in the housing market only a few people are able to get mortgages.” He commented. “Bridging companies will only see serious problems if they have been funded by these investment banks.”

 

 

 

Affirmative Finance’s Eugene Esterkin says it will be generally “business as usual” in the bridging sector, although they could see “more calls to fund deals where others are unable to fund them.” He also added that if the property market is further impacted by the US subprime crisis, “LTVs will continue to fall.”

 

 

 

John Maclean from Link Lending confirmed that general banking liquidity is “tighter” now and lenders who are funded by wholesale lines by banks may encounter problems in extending this type of funding. “On the other hand, disrupted markets often mean more opportunities and now you see more and more borrowers completing property transactions. With the crisis continuing, banks have constraints and are less willing to lend to each other – and that’s where bridging comes in.”

 

Do you think the fall of Lehman Brothers and the resulting market unrest will have any other effect on the bridging market?

 

 

Email your opinions to [email protected].

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