News
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West One Loans Broker Survey
BROKERS EXPECT TO WRITE 27% MORE BRIDGING LOANS IN NEXT 12 MONTHS
• Only 9% of brokers writing less bridging business than 12 months ago
• Buy-to-let the fastest growing area
• Good news for borrowers on rates and LTVsBrokers expect to be writing 27% more bridging loans in twelve months’ time, according to research from West One Loans. That figure is higher still among brokers who specialise in bridging business, who expect the volume of loans they write to increase by 33% in the next year.
According to a poll carried out by West One Loans, only 9% of brokers say they are writing less bridging business than 12 months ago. 28% said they are writing a similar number of loans, while 63% of brokers are writing more loans than 12 months ago.
Overall, brokers are writing 28% more bridging loans than a year ago, with one in ten saying the volume they have written has more than doubled in the last year.
Duncan Kreeger, chairman of West One Loans, comments, “The bridging industry has grown rapidly since 2010. Net lending is up 56%, which makes the mainstream market look turgid by comparison. The rate of growth shows no signs of slowing. 2012 will be a testing year for mainstream lenders. The CML has done its best to map out an encouraging year for the mortgage market, but the topography looks treacherous. Gross lending will only be a third of what it was in 2007, and investors are shunning banking stocks as they try to avoid the chaos caused by political dithering in Europe. This is pushing up the cost of funding for the mainstream banks. It means borrowers are finding traditional longer-term funding harder to come by, which is making bridging finance a more attractive option.
Things look to set to get even worse. With high street lenders retreating even further into their shells, they won’t be able to cater for the demand for mortgage finance, particularly from buy-to-let investors, who will turn to bridging to finance their projects. It’s no wonder brokers are taking on more bridging business.”
Good news for borrowers
Only 14% of brokers say LTVs on bridging loans are likely to fall over the next six months, reflecting the strong demand by borrowers for more highly geared products. 36% say LTVs will rise next year, and just under half (49%) predict they won’t change.
There was also positive news for borrowers and buy-to-let landlords on rates, with two-thirds (67%) of brokers predicting the average rate on a bridging loan will either hold steady or fall in the next six months.
Duncan Kreeger comments, “In stark contrast to the mortgage market on the high street, rates in bridging don’t look likely to increase in the next six months. The major banks will look to pass these costs onto borrowers in the guise of higher rates. This will encourage even more investors to turn to bridging.
“The fact more investors are turning to bridging – particularly buy-to-let landlords – is linked to rising LTVs. Banks are looking to protect their balance sheets so are becoming more reluctant to lend to borrowers who only want to put down a small deposit. This is encouraging more investors to turn to bridging, where high LTV loans are more accessible.”
The research also revealed buy-to-let is the fastest growing type of lending written by brokers, reflecting increasing demand from buy-to-let investors and amateur landlords. 33% of all bridging loans written in the last twelve months were for buy-to-let investors, who received a higher proportion of loans than any other borrower group. The next highest group was developers, who accounted for 22% of all bridging lending.
Duncan Kreeger comments, “Only 6% of brokers think it’s a bad time to invest in buy-to-let, while 83% think it’s now a good time for landlords to expand their portfolios. It is a reflection on the high yields available in buy-to-let, which is performing more strongly then traditional asset classes, and is tempting in more investors as result. But these buy-to-let investors are finding that the high street can’t cater for the increasing demand, and only offers limited financing options. They are turning to bridging lenders to fund their projects.
New entrants
Despite the fact they are writing more bridging loans, brokers’ reception to the influx of new bridging lenders was mixed. Just under half of brokers (46%) said the new entrants hadn’t made any sort of positive impact on the market.
Duncan Kreeger comments, “Professionalisation of the industry has come on leaps and bounds in the last few years – that is partly what is driving its success. But inevitably there are the more unscrupulous types who see bridging as little more than a cash cow to be plundered in the short term. They offer misleading headline rates, hoard proc fees, and attract negative press to bridging as result. We need to make it clear there is no room for these sorts of characters in the industry.”
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West One Loans Releases Broker Survey Results
West One Loans is in the news again following the published results of our latest Broker Survey. The poll, conducted through November and December 2011, was aimed at unearthing brokers short term loan business predictions for the coming year; the number of deals they were expecting to write, their views on LTVs and how they expected the market rates to pan out for borrowers and buy to let landlords.
The headline results are that in general, brokers expect to write 27% more business in 2012, whilst the brokers who specialise in bridging and short term finance expect the numbers to increase by as much as 33%. One in ten said the volume they have written has more than doubled in the last year.
Only 14% of brokers said LTVs on bridging loans were likely to fall over the next six months, reflecting the strong demand by borrowers for more highly geared products. 36% said LTVs would rise next year, and just under half (49%) predicted they won’t change.
There was also positive news for borrowers and buy-to-let landlords on rates, with two-thirds (67%) of brokers predicting the average rate on a bridging loan will either hold steady or fall in the next six months.
Coverage on the broker poll appeared in Mortgage Introducer, Mortgage Strategy, Mortgage Finance Gazette, My Introducer, The Bridging Loan Directory and Introducer Today.
To read the official press release please click here
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The Financial Times Features West One Loans
In an story highlighting the versatility of bridging loans, the FT’s Tanya Powley interviews West One’s CEO Mark Abrahams. “The purpose of raising finance is very varied,” explains Mark Abrahams of West One Loans, a bridging lender. He says some customers will also use a bridging loan for non-property purposes – such as short-term capital raising and project finance. For the full story click here
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Bridging is filling a gap in the mortgage market
Duncan Kreeger was in the news again with this piece about how bridging is enabling landlords to expand their property portfolios as potential tenants find themselves competing for homes. The buy to let industry is surging at the moment with average rents across England and Wales rising by 0.7 per cent to £718 per month according to LSL Property Services’ Buy-to-Let Index.
Read the full story here
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West One Loans Issues Bold Statement on Bridging Loan Finance
Our bold story, based on the results of the West One Bridging Index, was carried in full by Mortgage Finance Gazette in both their main magazine and its’ on line edition. You can read the full article here
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Duncan Kreeger’s Five Minute Interview
This week saw Duncan kreeger undergoing a five minute interview on Bridging Finance News. Everything from his excitement at launching the brand new West One Bridging Index to his wish of a dinner for two wth his wife on a desert island.
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West One Launches West One Bridging Index
West One Bridging Inde
RAPID EXPANSION PROPELS VALUE OF BRIDGING INDUSTRY TO £806M IN 2011
Filling void left by high street lenders
Net lending risen 53% since start of 2010
Volume of loans increased 26% year-on-year
Property investors turning to bridging in
their droves2011 will see gross lending in bridging finance reach £806m for the first time, according to
detailed projections contained the new West One Bridging Index, published for
the first time today.West One’s findings demonstrate how rapidly the bridging industry has expanded to fill the gap left by traditional high-street lenders as they have retreated from the mortgage
market since the credit crunch began.Duncan Kreeger, Chairman of West One Loans, said: “The buy-to-let market is extremely strong at the moment, with rents rising rapidly as tenants compete for homes. To meet this demand, landlords often need to refurbish or convert properties for the rental market, but do not qualify for buy-to-let finance until there is a full rental valuation. Bridging enables them to finance this development period. As a result, by the end of this year, we expect the market to top £800 million pounds for the first time.”
The volume of loans advanced has risen 26% year on year (to the end of August) as an increasing number of property investors have turned to the sector to finance their
projects. Gross lending rose 46% in the same period.Given the short-term nature of bridging finance – the average loan term was just under 8 months in 2010 – net lending can be rather volatile as loans constantly redeem and are
constantly granted. While the market is still relatively small, a few big loans redeeming or being granted can make a big difference to net lending so the West One Bridging Index aims to assess the longer-term trend rather than one quarter’s numbers. Net lending has expanded 53% since the beginning of 2010.Evidence for the demand from landlords is clear from the increasing shift in the market towards residential bridging finance and away from commercial. In 2009, 70% of loans were granted to the residential sector. Last year, this had risen to more than three quarters. So far in 2011, 82% of bridging loans by volume are to residential property
investors.Duncan Kreeger explained: “Having a clear exit strategy is the most important
consideration when taking out bridging finance. Residential property has a wider range of refinancing options than commercial property. The strong demand for accommodation means investors can be confident they can refinance easily when they are ready to rent. Commercial property is harder to value for bridging purposes and the market is relatively
oversupplied at present, making rental voids more likely and therefore exit more difficult.”The average size of a loan expanded to £322,000 in August, up 28% year on year as property investors tackled larger, more ambitious projects and took advantage of falling interest rates. The average interest rate on a bridging loan declined to 1.35% per month in August, down from 1.54% a year ago. This reflects the general decline in market interest rates.
Duncan Kreeger commented: “It is very hard to find any investments yielding a real return at present, so the bridging market is very attractive to those who finance the loans we make to our borrowers. In line with market trends, yields are declining, increasing the value of property investment projects for the borrowers. This is driving up the average amount they are looking to borrow.”
In line with the increasing size of the average loan, LTVs are also trending upwards. In August, the average LTV (weighted by value) was 48.4%, up from 42.5% a year ago.
Duncan Kreeger concluded: “Demand from property investors, combined with the strong credit performance of loan portfolio mean LTVs have been able to expand over the last year, but they still remain extremely comfortable. The industry is in excellent shape to provide good returns to those providing the finance and affordable, well covered loans to those completing their property projects.”
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Duncan Kreeger Launches Regular Blog on The Bridging Loan Directory
The Bridging Loan Directory has unveiled new signing, serial entrepreneur and chairman of West One Loans, Duncan Kreeger.
A regular social blogger away from the office , Duncan’s new blog “The Trials and Tribulations of an Entrpreneur” will provide a fascinating glimpse behind the scenes at one of the UK’s fastest growing bridgers.
Read Duncan’s blog here: http://bridgingloandirectory.co.uk/news/2011/10/17/trials-and-tribulations-of-an-entrepreneur/
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West One Loans Signs Deal With Oakes
Bridging lender West One Loans has agreed an outsourced asset management deal with property consultants Oakes CPS. The deal will see associate director Ben Hubbard transfer to their offices in Borehamwood, Hertfordshire on a semi-permanent secondment.
West One Loans will employ Hubbard to monitor service times to ensure it continues to offer brokers the service they need to complete loans in the shortest possible time. He will also develop the West One Loans valuer panel, and guarantee it covers all postcodes across theUK.
Duncan Kreeger, chairman of West One Loans said, “I pride myself that West One Loans does deals fast, and I am prepared to put my money where my mouth is. We’ve already got one experienced administrator for every person signing off a loan – which is about double the industry average. This is a further mark of our commitment. Oakes CPS have a lot of experience in assessing the real value of property and its saleability and with Ben visiting properties, he’ll be able to make sure the valuer is doing their job properly.”
Hubbard, who joined Oakes CPS in March 2007 and gained underwriting experience at Cheltenham & Gloucester, is currently employed by West One Loans on a case-by-case basis to either attend property they may be lending on or to carry out desktop valuations.
David Williams, the risk and recovery director of Oakes CPS said, “West One clearly appreciates the value of our services and Ben’s secondment will add a “belt and braces” approach to their already robust procedures.”
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Get A Free Virgin Wines Voucher When You Complete West One Loans Broker Survey
West One Loans is conducting a broker survey as part of our drive to uncover more accurate data about our industry.
We would really appreciate you taking the time to complete this short survey and in return, we’ll send you a free Virgin Wines voucher as a thank you.
To access the survey, please click here: West One Loans Broker Survey
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