Annual bridging lending reaches £4.4bn

Annual bridging lending reaches £4.4bn



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Annual bridging lending hit £4.4bn in July, according to a report released by West One Loans..

The West One Bridging Index found the short-term lending market rose by 12.5% in March and April, while high street bank mortgage lending fell by 12.8% year-on-year in July.

The size of the average bridging loan fell by 9.6% to £798,000 from £883,000 in May.

This is thought to be due to the caution ahead of the EU referendum.

Bridging interest rates have returned to 1.14% in July – the same level as May – after rising slightly to 1.16%.

Stephen Wasserman, managing director of West One Loans, comments: “Once the initial surprise of the referendum subsided, bridging lenders got back to business.

“While some deals did fall through at the end of June, plenty of new opportunities have appeared.

“With funding from traditional lenders drying up, the short-term finance sector has stepped up to plug the financing gap.

“Small businesses have also sought additional finance over the last few months to tide over the slowdown after the referendum.

“As the economy shook off any Brexit worries, bridging lending has increased.”

 

Danny Waters, chief executive of Enra Group, concluded: “The short-term finance sector has succeeded in growing despite economic uncertainty.

“Breaking through the £4bn barrier is a significant achievement for short-term lenders.

“With gross annual lending only passing £2bn in April 2014, bridging lending has doubled in the last two years.

“Short-term finance now has a much more prominent role in the wider financial sector, with far more borrowers making use of the speed and flexibility of bridging loans.

“The nature of bridging allows customers to meet a much wider variety of financing needs.

“For investors, with traditional fixed-income investments offering uncertain returns, such as minuscule government bond yields, short-term finance should be a serious consideration.

“Those lenders in the sector who are maintaining safe and sensible lending practices, will represent investment opportunities that are resilient enough to navigate through any future Brexit turbulence.”

Graphs attributed to West One Loans

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