Is commercial bridging competitive enough?
Commercial building

Is commercial bridging competitive enough?



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A recent poll conducted by Bridging & Commercial has revealed that over 50% of financial intermediaries believe that there is enough competition in the commercial bridging market.

 

 

According to the recent data from Bridging Trends, gross bridging lending declined to £142.75m during Q3 2017, down 4.9% compared with Q2 2017 (£150.07m).

Keith Aldridge, managing director at Amicus Property Finance, believed that increased competition in the commercial market was a mixed blessing.

“For the borrower, they should benefit from a more competitive deal and perhaps a fast turnaround on their project requirements.

“It’s good for Amicus because it keeps us on our toes and supports product innovation that meets the demands of the borrower.

“That said, lending on commercial is a complex business that requires specialist expertise in both funding and underwriting.

“While a competitive environment can lead to downward pressure on rates – lenders must ensure the quality of lending is fit for the requirements of the borrower.”

Nathan Ellis-Calcott, director at Thistle Finance, thought that the number of lenders in the market right now meant that rates were competitive by default.

"The sheer volume of competition also means greater product diversity and that is crucial, too.

“If anything, the most important thing is that lenders continue to price for risk and do not get caught up in some kind of race to the bottom on rates.

"That’s when problems start to occur.

“We all want the market to be competitive, but we also need it to be sustainable.”

Tim Mycock, development director at Reditum Capital, believed that the bridging market was currently saturated with numerous bridging lenders who were competing on price and who were looking for volume.

“This should be seen as a good thing for the consumer, however, we believe it is not good for the market.

“As a financier, we have always steered away from this.

“With the potential for another recession around the corner, we will remain cautious about the types of deals that we look at.

“We will never chase high-volume, low-margin deals and that’s what makes us stand out in such a heavily saturated field.”

Jordan McBriar, director at Adapt finance, added: “The bridging lenders in that space are competitive by means of pricing and appetite but – controversially – we don’t think some of their ‘commercialism’ towards this sector is reciprocal of their appetite and competitiveness to their residential bridging.

“Looking at longer-term lenders, they all have differing appetites which creates market trends and specific lenders for specific products with some overlay which, in turn, heightens competition.

“So, as we see the market evolving, I would like to see some bridging lenders create some more bespoke products to stir the market as well as being competitive on pricing.”

Michael Dean, principal of Avamore Capital, commented: “With a team of former commercial property surveyors and lawyers, we’re surprised by the lack of bridging enquiries we receive in the commercial space.

“Having seen some of the leading residential bridging lenders’ rates and LTVs, I can’t help but think that we could really push rates and LTVs harder than the market is used to."

Overall, the views on the commercial bridging market were positive for the future, despite the economic challenges surrounding the financial sector.

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