Borrowers have found it increasingly hard to obtain mortgages based on affordability
More and more brokers are turning to bridging loans as their clients continue to fail to secure mortgage finance, research from MTF’s quarterly broker sentiment survey reveals.
Tomer Aboody, director of MTF, said: “Bridging finance is plugging a funding gap as borrowers find it more difficult to obtain loans from mainstream lenders implementing tougher affordability restrictions.”
Some 86% of brokers noticed a rise in bridging loan volume during the fourth quarter of 2015, up from 76% in the previous quarter.
91% of the 181 brokers surveyedwere unable to source mortgages for some of their clients in the fourth quarter. 61% of brokers turned to bridging finance as an alternative source of funding in a bid to fill a liquidity shortfall, compared to 26% that opted for secured loans.
27% of brokers said they were unable to get mortgages for clients with poor credit history and 18% blamed property downvalue.
The south-east saw the biggest demand for bridging loans in the UK during Q4 2015 at 50%, followed by London, which grew to 33% in the fourth quarter, up from 28% during the third quarter of 2015.
Bridging finance was seen a useful financial tool by 100% of brokers surveyed during the fourth quarter, up from 93% in the third quarter and 77% during the second quarter, showing its growing prominence as a loan product.
Aboody added: “At MTF one of our defining characteristics is that we are non-status lenders. We don’t require evidence of trading history, accounts or proof of income. Instead we focus on the property and the client’s future plans. This allows us to take a practical, common sense approach to lending.”
