Bridging and Brexit in 2016

It’s not long until Christmas so it’s the time of year we look back on the industry as part of our preparations for the year ahead.

Scott Hendry
24th November 2016
Scott Hendry

The biggest talking point of the year, and likely to remain a hot topic in 2017 was, of course, Brexit. The decision of the EU referendum was expected to hit the property industry hard, although as we look back, we see that the market proved extremely resilient.

We’ve been specifically reflecting on the bridging industry as demand for short-term finance continued to rise, with the likliehood that this will continue in the year ahead.

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 per cent of cases.

More often than not, bridging finance is required for property purchases; whether it’s  buyers and investors needing to be in a position to buy fast to beat off competition for a well-priced or sought-after property, repairing a broken property chain that has resulted from funding delays, or for landlords, to purchase a buy-to-let property prior to having an assured shorthold tenancy in place.

So while the outlook for the property market remains positive, with recent statistics from the Royal Institute of Chartered Surveyors (RICS) going as far as to predict that house prices will rise annually by 3.3 per cent for the next five years, this only further complements the future of bridging loans.

Research which we carried out recently, found that despite the strong property market a third of people believe it will be harder to secure a mortgage with a mainstream provider post-Brexit. If this turns out to be the case, there would certainly be an impact on the bridging market, increasing demand further as we head into 2017.

With mortgage delays being a significant cause of requiring bridging finance, the mainstream lending market can, to an extent, dictate the bridging industry. As the actual process of exiting the EU gets closer, mainstream banks and mortgage lenders may get more stringent and request more affordability tests for consumers, resulting in a slower process.

Ultimately, with a lot of change ahead following the EU referendum, it’s difficult to predict too far into the future, but early indications provide a very promising outlook for the bridging industry.

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