2021 is projected to be a potentially prosperous year for the bridging sector, with activity having already reached record highs despite lockdown restrictions.
That is according to Shawbrook Bank’s newly published Bridging Market Bulletin, which indicates the highest volume of bridging applications ever recorded for the third quarter of 2020. In addition, the market’s return to strength after the initial national lockdown brought a huge 40% increase in bridging loan completions for the same period.
The figures from Shawbrook reflect the predictions of many analysts and economists, who expected to see a major uptick in activity due to the easing of lockdown restrictions and the impending deadline of the government’s temporary stamp duty holiday.
Particularly due to the limited time available to secure funds before the March 31 deadline, more movers and buy-to-let investors than ever before are considering fast-access funding like bridging loans.
Bridging finance activity acceleration
Speaking on behalf of Shawbrook Bank, sales director Emma Cox expressed optimism about the way the bridging sector is headed going into 2021.
“It’s been a difficult time for the property market, and of course the current landscape has left many facing challenges, especially within the bridging space, where some lenders had to halt business in this area for a period of time during the height of the pandemic,” she said.
“It is positive to see many of these lenders recently return to the market, and as our report shows, to see that the housing market is moving again.”
Miss Cox also stated with confidence that the up tick in bridging finance activity is not attributed exclusively to the temporary stamp duty holiday or the release of pent-up demand on the sector. She instead believes that interest among investors in general will continue to fuel the market’s performance even beyond the March 31 deadline.
“Whilst some of this activity in the bridging market will no doubt be down to the release of pent-up demand—something that Rishi Sunak’s stamp-duty holiday will further support—we are also seeing an uptick in investors looking at alternative strategies to sure up investments,” she said.
“The use of bridging to carry out refurbishments and conversions, as well as to aid chain breaks due to elongated sales processes, is an essential funding option that can support lucrative investment opportunities”.
“We recently announced revised pricing across our bridging range, with rates now starting at 0.5% for both regulated and unregulated products, in order to show our continued appetite to aid brokers in making the most of these opportunities.”
“The bridging market has demonstrated remarkable resilience throughout this year, and as much as we may face more challenges towards the end of 2020 and into the early parts of 2021, we believe this adversity may create opportunities for investors and brokers, which Shawbrook plans to continue to support as much as possible”.