January 2020
By Liam Cavanagh, Head of Bridging Finance at Ultimate Finance
Political and economic uncertainty has been a major obstacle for British business since the Brexit referendum result– so much so that business investment has fallen in five of the last six quarters. There are repercussions beyond business, for example the Bank of England’s research has shown direct impact on the property market, with demand for mortgages falling 12.7 per cent in the final quarter of 2019.
Following the December election resulting in a majority government it is now an almost certainty that Brexit will happen on 31st January. So, what does this mean for bridging finance? Many businesses have held off on investing in property throughout 2019 with their focus being refinancing their current projects, rather than new larger scale development opportunities. With an end to the uncertainty seemingly imminent, will there be an influx of activity in 2020 and beyond?
Growth on the horizon
Activity in the bridging market was beginning to ramp up again in the final quarter of 2019; foreign investment saw an uplift, as London and subsequently the wider UK, started to be viewed as a safe investment again.
Indications suggest the bridging market will continue to grow throughout the forthcoming year, with property springing back to life as the clouds of uncertainty diminish. Trends emerging within our client base show that more property developers and investors will become increasingly comfortable working with alternative finance lenders over taking out traditional bank mortgages. The stability of the property market positively affects the lending habits of investors with a hunger for flexible finance tending to increase.
Brokers bridge the gap
Financial brokers will play a key role in this uplift in the bridging market, both in terms of personally capitalising on it, and being key advisors to businesses looking to take advantage of the opening opportunities. Brokers are in the unique position of having access to an entire market of lenders so understand the tailored facilities they can provide and crucially, what the best fit is for the business’ aims and unique circumstances. Investors and developers inevitably don’t get into the industry thanks to a passion for finance, so without brokers, they’d be left wading through potential suiters without the vital guidance they require.
Ultimate Finance is committed to supporting brokers and their clients by also recognising that each case is unique and therefore offering flexible funding options. This is why we’ve taken the strategic decision to both increase the maximum size of our bridging loans to £2.5m while simultaneously decreasing our monthly rate to 0.79%. We evolve our products and services in response to business needs and expectations, enabling brokers to connect more property investors and developers with the flexible finance they need to take advantage of the upturn in the market and finalise new property deals.