While I do feel that ultimately all areas of lending will be regulated, the more open, reasonable and fair both lenders and brokers are now, the less the regulator will feel the need to impose strict rules and regulations
Jonathan Sealey is chief executive of Hope Capital
There seems to be not only to be a post election boom in the bridging market but a post credit crunch one. In the mainstream market it looks like being a tale of two halves, a slower first half of the year and a more buoyant second half. In the bridging industry we seem to have bucked this trend and seem on target to have a fairly constant flow of business.
August for most lenders is likely to reflect a typical seasonal slowdown but the rest of the year looks promising. It seems that where property developers are concerned, sentiment is high and many schemes that had been mothballed or put off during the past few years are now coming to market.
The message is definitely out that there is lending to be had and developers are taking full advantage of this. As the latest figures from the ASTL testify, the value of bridging loans in the last year, up until the end of June, increased by 32%, while the number of applications increased by 34% and I expect this only to increase further in the final quarter of this year.
There could be a lot of changes in the mainstream mortgage market over the next few months with the introduction of the MCD. This is less likely to affect the unregulated bridging market but there is already a growing focus on lenders only dealing with regulated brokers, especially where regulated loans are concerned.
This could definitely change the shape of the market almost creating a two tier market between the regulated and the unregulated brokers. With the inevitable, unstoppable creep of regulation it must only be a matter of time before all loans are regulated. However, while it is essential to stamp out bad practice, we need to be careful that regulation does not mean that the flexibility disappears out of the market.
The line to be drawn is providing the flexibility and speed of service that bridging is known for now and not insisting on advice for professionals that really don’t need it, while also ensuring that practices are fair.
Key in this process of fairness is that both lenders and brokers are transparent about the fees and commission that they either pay or receive. Only then can a borrower make a fair and balanced decision on whether to take out a loan, how much it will cost them and whether they expect to make a reasonable return on investment.
While I do feel that ultimately all areas of lending will be regulated, the more open, reasonable and fair both lenders and brokers are now, the less the regulator will feel the need to impose strict rules and regulations.
