Bridging lenders and their intermediaries are feeling positive, following the easing of recent restrictions due to covid-19

The specialist finance industry has been hit hard in recent weeks and bridging lenders have had to halt any new business during the coronavirus lockdown. With over 50 bridging lenders and hundreds of intermediaries, the industry has seen very slow growth with hundreds of staff been put on furlough and a limited funding due to no construction work, surveys or auctions taking place.

However, with restrictions easing, the thousands of households and property developers that use bridging finance each year will be able to start purchasing properties and getting their businesses back on track.

“It has been a testing time for the bridging industry,” explains Dan Kettle of Octagon Capital. “Our products are often used as a quick way to buy properties and avoid mortgage chains, but the lockdown has meant that almost all deals were put on hold and we could not acquire any new business.”

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“However, with restrictions easing, we are in a good position to resume funding again. Many people and investors will be excited to start building and buying property again and with mortgage lending even tighter than before, we could see positive growth and a good Q4.”

During the 10-week lockdown period, bridging providers were on tenterhooks over whether they could offer mortgage holidays to their customers and what the terms would be surrounding their agreements. Bridging finance is often used for a maximum of 24 months, but with so many construction jobs halted, the chance of these running their course could lead to the deals expiring and challenges for customers in terms of repossession or refinancing.

Nicholas Wallwork of the Property Forum explained: “The vast majority of building sites have come to a standstill. As a consequence, those working against tight bridging loan finance repayment dates will struggle. The property/project, if work does not restart very soon, would likely be worth nowhere near their target value. As a consequence, they would not be able to raise as much traditional finance as expected which would usually be used to pay off the bridging loan. Indeed, when you also factor in the potential reduction in property prices on the whole there could be a huge shortfall.”

However, with restrictions easing and the Prime Minister looking to open all non-essential retail by 15th June, there is more confidence in the specialist finance and bridging industry and many will be delighted to hear this news.

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