Overview of the 2016 Bridging Market
‘2016 was an unprecedented year of political change – Brexit, a new Prime Minister, and a new US President – events which on their own would be considered significant to the economy and the property market, let alone all together.
Against this backdrop, there have been significant tax changes and the Bridging industry has also had to deal with the implementation of the Mortgage Credit Directive. Despite this, according to industry data, the bridging industry has continued to grow with a number of new lenders entering the market. This increased competition, along with an abundance of cheaper wholesale debt has seen downward pressure on rates, notably towards the back end of 2016.
Whilst the barriers to entry remain low, we believe that 2017 will continue to see a number of new entrants in the market and further downward pressure on rates. This in turn is likely to lead to a fragmentation of the market as lenders try to find their niche to gain market share. Unique products, service differentiation and higher LTVs are likely to come to the fore as the post-Brexit hangover recedes.’