90% of brokers plan to increase bridging lending
A recent survey asked brokers about their views on bridging lending. Nine out of ten of them said that they expected to increases the number of bridging loans they arrange.
Interest rates on bridging loans have dropped significantly over the last few months, but borrowers are still requesting lower rates. Almost half (48%) of brokers would like
lower interest rates. Fierce competition amongst lenders has kept rates down, but there is a limit to how low they can go without threatening their profitability. Rates have reduced by around 3% in 2018, but understandably borrowers would like to see rates even lower. It is doubtful whether bridging rates will ever be lower than mainstream lending rates. Every loan is underwritten manually and this is more costly than automated systems.
Bridging loans are quick to arrange, but a third of brokers are concerned that their client’s solicitors can be slow, and this delays loan completions. Another area of delay is receiving and collating all the information required from the borrower.
Issues that brokers want addressing include flexibility on loan to value (LTV) ratios. Some brokers wanted to see lenders provide a quicker service. About 40% of brokers thought that lending criteria are sometimes too strict and applications can be turned down which brokers expected to be approved.
Though brokers wanted some improvements to the bridging finance market, the survey showed a good picture of the bridging industry with brokers positive about the future of bridging finance.