The latest survey from the Association of Short Term Lenders (ASTL) shows that, despite the Brexit uncertainty and subsequent drop in the residential property market – which the Governor of the Bank of England, Mark Carney, has predicted could crash by up to a third in the event of a No Deal Brexit – bridging lenders still have confidence in the economy and property prices.
It appears that the tighter market has encouraged more people to look for bridging finance and short-term finance, which is having a positive economic effect. Between the ASTL’s 2019 January and June surveys, there has been a fall in the number of respondents who say they are not confident in the economy’s long-term prospects – from 29% to 18%. The positivity continues with 60% now expecting to see a slight growth in property prices, although 68% do not expect to see a ‘Brexit Bounce’.
In fact, the ASTL has reported a growth in the total of bridging loan applications in the first quarter of 2019, to £5.96bn, a rise of 13.6% on figures for Q4 2018. The average loan size has also risen by more than 11%. The length of loans is also rising, from nine months to between ten months and a year. This increase in time scale has been accredited to the current property market where the average length of time between listing and completion has slowed to 19 weeks.
The good news for those applying for bridging loans is that interest rates fell to an average of 0.74% in the first quarter of 2019, down from 0.8% in Q4 2018.
So if you are considering taking out a bridging loan, now is a good time. Despite Brexit uncertainty, more and more businesses are finding ways of driving themselves forward with the aid of short-term finance.
Now that Boris Johnson is Prime Minister, what happens next remains to be seen. When the news of his appointment was announced, he said: “We are going to get Brexit done on 31st October, and we are going to take advantage of all the opportunities it will bring in a new spirit of ‘can do’.” He has previously described his determination to leave the EU on 31st October as “Do or die”.
Over the past three years, the rise in bridging loan applications has demonstrated that many organisations view bridging loans as an effective short-term option.