Higher bridging loan lending pinned on rising sales fall-through risk
Increasing trend among buyers is to turn to short-term finance to save their dream home rather than suffer a fall-through.
A group of the UK’s leading bridging loan providers says a spike in lending during the second quarter of this year has been driven by home buyers using their products to ‘save transactions’ that look likely to fall-through.
Rightmove recently blamed a rise in sales fall-throughs on vendors and agents pricing properties too high and then having to climb down when viewings and offers fail to materialise.
“We can see that homes are twice as likely to fall through, take much longer to sell, and are less likely to eventually be sold at all, if they need to be reduced in price during marketing,” said its spokesperson Tim Bannister.
The latest Bridging Trends industry report shows gross lending increased quarter-on-quarter to £201.8 million with ‘preventing a chain from collapsing’ being the most popular use for bridging loans. This now represents almost a quarter of all activity, followed by investment property buying and auction purchases.
Save their purchase
“We often talk about short-term property finance as a tool for investors who may want to embark on a refurbishment project or buy a property at auction, for example, but the most popular use of bridging this quarter was amongst homebuyers who wanted to save their purchase in a chain break,” says William Lloyd-Hayward of Sirius Finance.
“This is an everyday occurrence that could impact any homebuyer and any broker, and so those brokers who are not familiar with the bridging market should consider partnering with an expert in this area to ensure they are well placed to best serve their clients.”
Andre Bartlett at Capital B Property Finance adds: “During Q2, I’ve noticed a significant uptick in the bridging loan market.
“This growth seems to be fuelled by the urgent need to prevent chain breaks in property transactions, especially as the traditional mortgage market faces delays.”
The Bridging Trends report has contributions a clutch of industry players including AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Finance and UK Property Finance.
