Charles Haresnape: 'It is likely the sector will only continue to rise in 2016'

06:30 Thursday 25th February 2016 | 23

As one would expect, the larger issues tend to dominate the current discussion of the UK's housing market.

p>As one would expect, the larger issues tend to dominate the current discussion of the UK’s housing market, such as how to go about increasing housing supply or the upcoming implementation of the Mortgage Credit Directive. However, while not commanding a huge proportion of market share, data recently released by the Association of Short Term Lenders (ASTL) showed that over the course of 2015, bridging loans written by members, of which Aldermore is one, came to £2.59bn, an increase of 13.8% in 2014.

With completion levels increasing at double the speed of the mainstream mortgage market, the future is bright for the industry, which currently boasts 32 lenders.
While context for this growth is certainly important – bridging accounts for only around 2% of the UK’s total mortgage lending – the rise in lending levels is a good indicator of the strength of the housing market as a whole.

With rising consumer and developer confidence, there has been an increase in the type of deals where specialist loans such as bridging finance come into play. For example, with both residential and commercial property prices increasing, investors are likely to place a greater emphasis on value-adding strategies such as refurbishment, resulting in more people searching for properties requiring renovation, in turn using a bridging loan. Data from the Savills Commercial Development
Activity report would appear to support this, with figures from the end of the year showing the 39th successive monthly rise is refurbishment work.

The 2015 Bridging Finance Trends report showed that LTV ratios were consistent throughout the year, reflecting a conservative and sensible approach to lending, with the highest average seen during the year peaking at 50.9% during the third quarter of 2015. Mortgage delays were the most popular purpose for a bridging loan in 2015, rising throughout the year to 44% in Q4 2015, up from 8% in Q1 2015.

It is important for lenders to ensure that the highest standards are maintained, that customers understand the implications of the finance they take out and all industry participants remain fully transparent to ensure no one is left with finance that they cannot afford. At Aldermore, we focus on presenting customers with an additional ‘bridge to term’ option, to make sure that customers have an exit strategy for any loans. The bridging industry, while still a specialist lending option, has shown impressive growth over the last few years as more people see it as a viable finance option for a range of circumstances, where it is likely the sector will only continue to rise in 2016.

Attributed to Charles Haresnape, Group Managing Director – Mortgages at Aldermore

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