Looking back on bridging and Brexit

It’s been a busy year for bridging, and a surprising one taking into account all the economic changes affecting both the finance and property sectors, from Brexit to the buy-to-let tax changes. However, despite the challenges, the market has proved resilient and bridging continues to thrive. 

With more choice of bridging products than ever before, both regulated and unregulated, alongside favourable rates and flexible criteria, brokers saw strong demand for short-term finance this year. 

Brexit didn’t appear to have the impact on the success of the bridging sector that some had feared, with specialist bridging loan broker and packager First 4 Bridging announcing it had seen a 30-40% increase in broker enquiries on bridging finance since the EU referendum.

Mortgage delays remained the main reason for borrowers taking out a bridging loan in 2016, with figures from the Bridging Trends Index showing that this accounted for 30% of cases. Because of this, it’s possible that the mainstream lenders’ response to Brexit will somewhat govern the outlook for bridging. 

As the actual process of exiting the EU gets closer, and the finer details of how it will be executed are announced, mainstream banks and mortgage lenders may get more stringent and request more affordability tests for consumers, delaying the property purchasing process further and resulting in buyers turning to bridging loans to secure the property they want.

We recently carried out research with 2,000 consumers and found that a third of those surveyed believed it would be harder to secure a mortgage with a mainstream provider post-Brexit. If that turns out to be the case, there would certainly be an impact on the bridging market, increasing demand further. 

Here at Together, we lent £586.8 million for bridging in the 12 months to 30th June 2016 – a 38.7% increase on the previous year and we have ambitious plans to continue our growth in 2017.

On another positive note to end, a quote in Mintel’s 2016 bridging loans report suggests that it expects a strong 2017, stating: “Bridging has provided a vital resource to those looking to secure immediate finance. The industry’s substantial growth over the last seven years suggests that the scope for innovation and collaboration between lenders and brokers will expand alongside awareness of how bridging finance can be useful in a range of scenarios, which will only increase growth potential.” 

Sounds like good news to me!