It’s now over ten years since the Credit Crunch first began to bite back in 2007/2008. High Street Banks and institutional lenders were quickly impacted, resulting in severe liquidity restrictions. Despite direct intervention by the Bank of England to reduce interest rates, interbank lending rates remained stubbornly high, a reflection of the banks lack of confidence in each other’s financial security. This in turn lead to a severe reduction in both personal and corporate credit and a rapid downturn in the housing and construction markets.
Businesses both large and small were suddenly unable to access credit but as mainstream banks concentrated on rebuilding their balance sheets by tightening or simply withdrawing their lending criteria a gap emerged in the market, a gap which a new breed of innovative and pro-active specialist lenders sprung up to plug.
With interest rates at historically low levels these new lenders evolved as a vehicle for capital holders to see a more attractive return on their money. Third Party funders in the shape of private investors and family offices, hedge funds and in time challenger banks fuelled a rapid growth in the volume of business being written by these new lenders.
As the property market recovered more and more property investors turned to these specialist lenders as they looked to take advantage of the steady increase in property prices both in London and across the wider UK. Simultaneously, awareness grew that short-term bridging loans could be used for much more than simply acquiring new investment properties. Businesses began to appreciate that bridging loans could be used for a variety of different purposes from settling creditors to injecting capital. Where they had once relied on their High Street Bank, businesses were now able to turn to this new and flexible breed of lenders.
Recent years have seen this wave of new entrants and their diverse mix of funding sources further enhanced by the emergence of peer-to peer lenders. Offering consumers the opportunity to invest in property transactions with a specified sum of money at much higher rates of return than more conservative investments such as building society or deposit accounts, they have proved very popular.
In summary then, the last ten years has seen the welcome rise of a wide variety of new specialist lenders. They have stepped in to meet the needs of businesses and investors looking to take advantage of rising property prices. In doing so many have generated excellent returns for their investors and grown the market from just under £500M in 2011 to an estimated £4B (+) today.
Consequently, the industry now stands strong in the face of huge political and economic uncertainty. The Bridging industry has proved that it can thrive in any macro-economic environment with many lenders having been founded and forged during these turbulent times. Even in declining markets there will always be compelling buying opportunities, opportunities that bridging lenders are adept at servicing.
Of course, there are concerns. Increased competition within the sector has resulted in growing numbers of lenders writing more risky loans at ever higher LTV levels. A downturn in the market, whether it’s Brexit induced or has its origins elsewhere, could well see some of these new lenders overexposed with lines of credit reduced or even withdrawn. Even allowing for this however many lenders will continue to have access to private money be this from High Net Worth investors or family offices. It is this diversity which will ensure the sector plays a key role in under pinning the housing market and wider economy in the uncertain months ahead.
Still unsure and need to explore your options? Why not consult an expert?
At Central Bridging we have built an extremely diverse funding base with a mixture of private and institutional backers. This spread of funding sources will allow us to continue writing loans even if, in the coming months, lenders reliant on purely institutional funding lines or peer to peer investors are forced to withdraw from the market. We offer a range of loan facilities for business use from £100K to £2.5M (more on an exceptional basis) over periods from 3 to 24 months. Our loans are secured on freehold property across England and Wales.
Crucially you will always speak to a decision maker who will take time to understand you and your situation and unlike some of the bigger banks and lenders will then tailor a solution that best suits your needs.
Why not give us a call on 03332 400 506 for an informal chat about your options.
Media Contact
Company Name: Central Bridging
Contact Person: John Clifford
Email: Send Email
Phone: 03332 400 506
Country: United Kingdom
Website: https://www.centralbridging.co.uk
