Are we seeing the first signs of a commercial lending recovery?

Why Would a Bridging Lender Offer Buy To Let Mortgages?

Tiuta PLC entered the buy to let market back in June 2009 with a high interest rate mortgage targeted at Houses of Multiple Occupation (HMO). Interest rates were set at between 12.9% and 14.9% (ouch!), with loans available between £100k and £500k.

November sees the launch of a main stream product with criteria set as follows:-

• 3 year fix from 6.99% per annum
• 70% of open market value
• Loan not to exceed 85% of purchase price
• Max loan £2.5m
• 3% facility fee that can be added to the loan
• 110% rental cover
• Early Redemption Penalty for first two years

By offering mortgages, we presume, the lender will be able to write more bridging loans as it can provide it's own exit and not rely on others!

As the company is following a previously declared diversification strategy it obviously has funds to lend and this seems like an ideal way of increasing market share.

However, the main questions are:- Is this the first sign of recovery in the commercial lending market? Or is this to provide a method of refinancing bridging loans due to restricted mortgage availability elsewhere?

The actual answer probably doesn't matter, anything that brings more capacity and competition into the commercial lending sector must be a good thing!

Submitted by Bridging Loan Broker on Wed, 11/11/2009 - 16:01

Return to our Bridging Loan Blog