B&C Poll: “Just £4bn? That will be a walk in the park”

After a successful start to 2015, B&C asked experts whether the industry could break £4 billion by the end of the year.

The survey produced a split result with 44 per cent believing it would break the £4 billion mark while others were more cautious as 56 per cent said no.

To find out more B&C spoke to a number of bridging lenders and brokers to find out if they felt it was possible for the bridging market to be worth £4 billion by the end of the year.

Head of Sales and Marketing at Dragonfly Property Finance, Mark Posniak, is very confident that the £4 billion mark is a realistic target.

“Just £4bn? That will be a walk in the park. I’m joking, of course. On a more serious note, while we’ve always avoided formal predictions and forecasts at Dragonfly, there is a good chance this figure can be achieved,” said Mark

"If other lenders are seeing the kind of demand we are at present then it’s not an unrealistic number. The General Election result will add to the feel-good factor, especially at the higher end of the market."

Director of bridging at Brightstar, Kit Thompson is more cautious as he believes for the figure to jump by 25 per cent by the end of the year is optimistic.

“I fully expect the market to carry on expanding as more lenders enter the market, more funding becomes available and more brokers become aware of the benefits of bridging for their clients, but I would be surprised if the market that we can measure were to exceed £4bn this year," said Kit.

Managing Director of Amicus, Keith Aldridge, also believes that £4 billion is optimistic but he is confident that the growth will continue.

“What I do know is that Amicus growth this year is giving us confidence to expand our proposition, confident in the knowledge that our market is stronger than it was last year and our lending across the residential, development and commercial sectors should see us exceed £300m," added Keith.

Head of Communications at Omni Capital, Robert Sturges, agrees that an increase to £4 billion maybe be a bit of a stretch but there are two important factors to consider before dismissing the idea.

"First, the unexpected and decisive outcome of the General Election will give a boost to house building. We know the demand is there, and a government that is pro-home ownership and (hopefully) anti-interventionist should have a significant and positive effect on the sector and the funding on which it relies,” said Robert

"Second, bank lending will remain depressed. The banks are being challenged on a number of fronts and all evidence points to a commensurate return to low-risk, core product lending. This will allow further room for alternative lenders to take market share.”

However, Robert did state that the industry should take care when measuring the size of bridging as either overstating or understating won’t help from a regulatory perspective.

“To get an accurate figure we need first to define and agree what is meant by 'bridging' and then extrapolate by collecting data from the deepest available pool. We've said it before, but we believe the lenders' trade body - the ASTL - is best-placed and best able to achieve this on behalf of the industry," added Robert.

Ashley Ilsen of Regentsmead agreed, saying: “It's hard to ascertain the exact value of the entire bridging market and where we are to date. Unregulated deals and private lenders mean that the total figure can often be more of a finger in the air estimate rather than an exact amount.”

Finance 4 Business’ Russell Martin believes there is a problem with assessing the size of the bridging market mainly due to bridging lenders moving into development finance.

“As more bridging lenders enter the development space I can only assume that the 'development loans' are classified as a bridge for submission purposes thus exaggerating the figures,” said Russell.

“That said, as long as the same data source is used as a barometer, whilst the quantum may in fact be inaccurate, it is more than likely to be consistent thereby highlighting the trends which is probably a more important measure than the quantum. Finance 4 Business is experiencing a steep level of growth in the short term finance space which does support the market trends published.

“The good news is also that the growth shows no signs of abating any time soon.'

Jonathan Sealey, Chief Executive at Hope Capital, believes that the split between yes and no is so close due to the number of sources of information from which the size of the bridging market is quantified.

“You have the ASTL’s quarterly figures, West One’s Bridging Index and now Bridging Trends. The problem with having all three of these within bridging lending is that they all use data from different sources within the market to measure similar key indicators,” said Jonathan.  

“Whilst all of us within bridging will look at each of these on their own merits, it’s very difficult to quantify how large the bridging market actually is.”

Director of West One Loans, Duncan Kreeger believes that the £4 billion mark may be a bit optimistic but its latest projections show that this year may well be another bumper year for the industry.

"The latest projections from the West One Bridging Index suggest that annual gross lending of £3bn is well within reach by the end of the year, but £4bn may have to wait until next year or beyond,” said Duncan.

“Either way, the fact we've even discussing the idea of £4bn worth of gross lending shows just how far the industry has come - and we all agree that the bridging industry is set to enjoy another bumper year."

Chief Executive of ASTL, Benson Hersch concluded: "Sentiment is very positive amongst bridging lenders at the moment. 

"In a recent survey 73% of ASTL members expected their business to do better this year than it did last year.  Although I would be cautious about predicting that the bridging market will exceed £4 billion of new business in 2015, I do expect to see significant positive growth this year."