It is great to see that the bridging sector is showing healthy growth, which illustrates the continuing development of a robust and accessible market. Growth in annual gross lending now stands at 24 per cent, over the 12 months ending 1st July 2014. This compares with an 18 per cent year-on-year expansion seen just two months ago, for the year ending 1st May.
Bridging loans can essentially be used to help firms to resolve any temporary cash flow issues while keeping all of their assets intact. This naturally makes them the perfect bedfellow for houses sold at auctions, where short-term finance is needed in order to bridge the gap until a more long-term solution is found. Auctions are a fast-paced market where the buyer decides what they want to pay and competes in an entirely transparent auction room.
Latest auction volumes from estate agents Barnard Marcus illustrate this relationship between the bridging market and the auction market. Barnard Marcus says that all of its centres are experiencing record levels in terms of both number of lots offered and those sold.
In fact, the volume of lots offered by Barnard Marcus has increased by 24 per cent to July of this year, while the capital value of auction sales across the business has increased by 27 per cent compared to the same period last year.
Chris Glen, Divisional Managing Director at Barnard Marcus explains this trend: “Buyer appetite is strong at auction with purchasers benefiting from the certainty that an exchange of contracts is effected on the auction day itself.
“Of course, this needs to be backed up by availability of funds for an auction purchase, which is where the speed and availability of Bridging Finance comes into its own, providing the opportunity for people that want to buy at auction, to be able to.”
It is great to see that bridging loans are helping more people to buy property, particularly in an environment where funds are needed quickly and efficiently. And this dual and interdependent growth of bridging and auctions looks to be a trend set to continue. Let’s hope so.
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