Bridging loan market fighting fit says report

THE UK’s bridging loan or short term finance sector remains largely untouched by the current financial crisis, according to research.

A study by Mathon, one of the UK’s leading asset-based lenders in the commercial property sector, suggests that potentially strong deals are still circulating and are in need of finance.

The research found that lenders are confident for their future with 88% of respondents stating that the quality of leads in the market place remained as good as last year if not better.

Around 70% said that clients were increasingly preferring to do business over the phone as opposed to online.

Andrew Sobolewski, chief executive officer at Mathon, said: “The commercial bridging sector has had to adapt and diversify in order to continue being a much valued feature of the UK property finance market.

“While the sector remains under-researched, we can see from the results that despite the economic downturn, the level of deal flow remains robust.”

Loan size has also increased with more than half of respondents reporting an average increase of 22%. However, in 2007 91% reported an average increase in loan size of 32%.

More than two-thirds stated that less than 20% of their business leads were made of distressed and/or auction sales, yet lending criteria such as LTVs are of increasing importance to brokers as they try to place deals

Almost all of the respondents have placed unregulated bridging in 2008 and it was reported that, on average, unregulated bridging accounts for 72% of the business placed

Nearly 70% of all bridging loans business can be attributed to property and land acquisition, refurbishment or redevelopment and purchase at undervalue.

More than 40% of lenders questioned said they were confident that the market would return to the pre-credit crunch level within the next 12 months.