As the nation begins to exit lockdown, we continue to see a shift in trends across the lending sector, with investors taking on new investment opportunities. Recent figures show that the last two quarters of the market have been stable, with a traditional chain break being the most popular use for bridging finance. Highlighting how borrowers are opting for bridging to navigate their delayed property purchases.
We’ve put together a forecast of trends for Bridging Finance in Q2 2021.
The trend of moving from renting to buying
Despite what’s happening in the market due to Covid 19, there has been a surge in demand for buying properties instead of renting. House prices have recovered well, and investors are keen to take advantage of these opportunities to expand their property portfolio. This demand reflects what we’ve seen at Cornerstone Commercial Finance, increasing clients seeking bridging loans for purchases or refurbishments and conversions.
Auction purchases on the rise
Recent figures show that there has been an increase in the number of properties sold at UK auction houses this year. Compared to the property market, auction houses quickly adapted to the lockdown rule changes, with auctions moving online to remove the risks of travelling.
Secondly, while the stamp duty holiday has been beneficial to buyers of both auction and housing market properties, the closer to the end of the holiday we get, the less likely buyers on the open market will be able to benefit. The stamp duty holiday has also caused a surge in property purchases, so investors will use this opportunity to expand their property portfolios via auctions to boost their income.
Increase in staycations
Some people may still be sceptical about going abroad for a while following the pandemic, so there has been a huge increase in people looking to holiday in the UK. Investors could see this as a golden opportunity to expand their buy-to-let portfolio turning to bridging finance to invest in holiday lets.
Trends in the wider buy-to-let market
Due to tax changes and the increase in Limited companies, buy-to-let has become the busiest side of lending in the last few months. There has been a shift where investors who originally invested in commercial properties are now looking to build their portfolio around buy-to-let and semi-commercial properties.
A recent survey from Bridging & Commercial has shown that there are three big challenges that the Bridging Finance sector will face in 2021:
- Increase in competition
- The ability to access flexible and efficient debt funding sources
- The decline in property values and limited access to talent and human capital
Don’t hesitate to get in touch with one of our Bridging Finance specialists here.