Bridging Market End Of Year Update
It's been a tough year for both bridging lenders and brokers. In probably our last post of the year we look forward to next year.
Where is the bridging loan market heading in 2010?
We end the year with a number of lenders dropping out of both the short term bridging loan and mortgage market. Criteria for loans have been strict with much lower loan to values on offer. In particular property developers have been hit hard.
The total amount of bridging loan lending has suffered a huge drop mirroring the decline in the general mortgage market. Lenders are only lending if they can see a good exit route.
Although the market has lost capacity we have seen a "new entrant" to bridging recently (Drawbridge Finance). There is also rumoured to be a new bank entrant in early 2010 (Metro Bank) which is welcome news. The Post Office and Virgin are also rumoured to be close to entering the banking sector. We have even seen one bridging lender become a surprise entrant into the buy to let mortgage market
Hopefully this news is signalling a change for early in the new year, for instance a willingness from the banks to lend to smaller niche lenders would be a start. The return of hibernating lenders such as Commercial First would be very positive!
We'll be monitoring the finance news of any easing or increased capacity and will report here.
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Update - Fri, 08/01/2010 - 14:16
Well it looks like Virgin Money are joining the retail banking sector pretty shortly as predicted. Access to a banking licence will be gained by taking over a small somerset based private bank called Church House Trust.
See the BBC's report here for more details.