Last year, we saw a surge in bridging loans as people were taking advantage of the stamp duty holiday, rushing to complete their property purchases before the holiday ended. However, after the stamp duty holiday ended in September, the bridging market had a bit of a dip in interest, as residential property prices were on the rise.
After the pandemic restrictions were lifted, there were further changes within the market. For example, with complexities within the sector, there was an increased need for synergistic services.
Predictions for 2022
Despite the fact we’re unaware of how 2022 might pan out for the forthcoming months, many bridging lenders are optimistic that the market will perform well this year. During 2021, brokers and lenders adapted their offerings to match the market’s demand and opportunities available, and this will most likely continue throughout the course of this year.
When the pandemic struck, the demand for developer exit loans took a major hit due to lockdown causing delays completing builds. Many brokers believe that it will make a rebound this year given the ongoing ease of restrictions. Since Brexit, the time needed to complete projects has increased as well as the cost of materials. This means developers are having to take extra caution when planning the timescales of work and cashflow forecasts.
Moreover, underwriting and manual assessments are typically relied on for bridging finance, and it is almost certain that there will be further development in automated valuation models, biometric ID and more automated decisioning for some transactions.
What did we learn from 2021?
In 2021, the bridging market was measured at £4 billion, which was the same as 2018 and 2019’s statistics, despite the decline in 2020 because of the pandemic. The boom within the bridging market last year was mostly fuelled by the stamp duty deadlines throughout summer.
One of the key takeaways from 2021 is that heavy refurbishment and developments projects will incur increased costs and extra time to complete because of Brexit as well as the pandemic. This is very likely to be continued throughout this year, which is why developers and lenders should consider contingency planning when assessing new project opportunities.
Furthermore, these delays that are currently occurring in the bridging market could be one of the causes for an increase in bridging finance enquiries this year. Ensuring the right professional team is chosen is key, especially when choosing solicitors. Therefore, this year might be the most successful one yet for the bridging market.
How Finance 4 Business can help
Our expert bridging finance team can help you source a bridging loan for your upcoming property purchases or development projects.
Contact a member of our team by calling 0121 309 0444 or email enquiries@finance-4-business.co.uk.