Brokers expect an average of 45% more bridging business in the next 12 months, according to the latest West One Broker Sentiment Survey.
Meanwhile, 71% expect their own bridging activity to grow in the next year. Only 26% expect the same amount of bridging business, while those predicting bridging activity was just 3%.
“A mild slowdown in the last quarter, as seen in our West One Bridging Index, indicated a moderation in the rate of growth,” said Duncan Kreeger, chairman of West One Loans. “But these figures suggest a longer term pattern of consolidation. Brokers think bridging still has a long way to go, and this comes as traditional lending models have stumbled once again in August.”
Those brokers surveyed believe product rates to improve and LTVs to rise. 18% of brokers surveyed expected an increase in rates and 39% a fall. 43% said there would be no change.
In addition, 25% think LTVs will increase in the next year, compared to 13% respectively who think they will fall. 62% expected no change.
Kreeger said: “Brokers appear to agree with the conclusions we drew from the latest West One Bridging Index. Rates have risen from low levels at the beginning of 2012, but this increase is not expected to become a long-term trend. Equally, any indication that LTVs will rise means that the fall we recorded in the last quarter does not represent the start of any major upheaval.
“What is encouraging is that brokers aren’t forecasting any sort of major correction – either in product rates or credit availability. Such gradual changes are consistent with the increasing stability and maturity of the bridging market. Our early indications for September support this.”
The rate of growth in business lending secured against a residential property accelerated faster than any other part of the market. 82% of brokers say they are seeing increased activity, compared to 54% in February.
Commercial bridging loans (to businesses and secured against commercial property) are a growing area for 93% of brokers.
Kreeger added: “The government is keen to stress the importance of increasing business lending, but can’t put its finger on where the money should come from. While the economy has shrunk, the number of small businesses has boomed – according to BIS, 60% of private sector jobs now come from SMEs.
“More bridgers are lending to people who can demonstrate a real business case but are shunned by restrictive practices at high street banks. In May, Lord Young’s report identified peer-to-peer and asset-backed finance as possible sources of business funding. He hit the nail on the head.”