Relay refinancing boosted by Covid and Brexit
The twin specters haunting the UK economy – Covid and Brexit – have combined to boost demand for bridging refinancing in 2021, according to industry executives.
Relay refinancing boosted by Covid and Brexit
London, UK, 01 October 2021 (GLOBE NEWSWIRE) – “We are already seeing an increase in demand for bridges, with the majority of cases linked to the pandemic,” says Vic Jannels, CEO of the Association of Short Lenders term (ASTL). “During the lockdown, the fact that appraisers, lenders and lawyers were working from home caused a major slowdown as many projects could not be completed on time.”
Demand for bridging funding in general soared in the UK between July and September 2020, with a record number of applications, ASTL reported.
Although most lenders were sensitive to borrower difficulties, as long as clients were open and communicative, the incidence of re-bridging also increased markedly from mid-2020 and remains a feature of the market.
“We’re seeing demand for bridging refinancing for people downsizing,” adds Jennels. “It’s mainly in the big cities like London, Manchester and Birmingham, where the pandemic has allowed people to work from home and they are selling their expensive properties for a place with more space and a garden, outside the city. . This movement is a breeding ground for re-bridging where they are unable to sell as quickly as they hoped.
According to Ernst & Young’s latest market research, published in early 2021, Covid-19 is by far the biggest challenge facing the bridging finance market. as “the most important challenge impacting the UK bridging finance market”. Like Vic Jennels at ASTL, the study reports “difficulties in making loans during the … pandemic and the challenges associated with moving to a remote work environment.”
Just as working from home and months of lockdowns have spurred the adoption of new technologies like Zoom calling, the EY report found that technology looms large in the gateway industry as pressure increases for lenders are embracing new digital platforms and open banking standards, allowing easier access to expertise and remote transactions.
A potential consequence of greater digital adoption by the bridging finance market is that bridging will become more common as borrowers can access alternative offers more easily and quickly. “We see new technologies as an important tool for transition refinancing,” says Stephen Clark at Finbri. “Speed, which clearly depends on the efficiency of our processes, is a key decision factor when clients seek bridging financing and the adoption of digital technology has helped us achieve this. “
In some ways, the effects of Brexit on the UK property market have been minimal. Values are now above the January 2020 level when the UK officially left the EU, along with mortgage and lending activity. While EY’s 2019 transition financial report cited Brexit as the main concern and challenge, its threat faded noticeably in 2020 and declined further in 2021, when only 15% of respondents ranked it. among the top three challenges.
“In December 2019, when the pandemic had not yet bit, we were facing a cold war, caused by Brexit, feeling that no one knew what was going to happen”, explains Vic Jennels to the ASTL. “But I would say that overall the mortgage market hasn’t really suffered from Brexit. In fact, between June 2020 and September 2021, I have never experienced such a high level of investigations: it was the busiest period of the last 20 years.
On the contrary, Jennels argues that the market has been too busy: “We are struggling to get staff to process the number of mortgage applications. “
Lack of staff is a common refrain, from hospitality to transportation and beyond. This also applies to the construction industry, where developers have found themselves unable to move projects forward due to a lack of construction workers, supply chain disruption, and rising material costs, exacerbated by Brexit. “The delay in materials is an additional challenge that could see an increasing number of borrowers run to term, which would put pressure on cash flow,” said Philip Gould of bridging lender Avamore Capital.
“There is a high demand for properties and very little supply,” notes Jennels. “So this is an area where development projects are slowing down and we could see transitional refinancing develop. “
The recent surge in natural gas prices, which led to the shutdown of CO2 manufacturers and the shutdown of a large number of energy suppliers in September 2021, could be a harbinger of volatility in prices. price to come, partly linked to Brexit and potentially high. impact on the re-bridging market.
UK-based bridging finance as a whole saw an increase in demand in 2020 compared to 2019, with claims valued at £ 25.82bn, up from £ 23.19bn in 2019. The demand remained buoyant in early 2021, with demands rising 18% in Q1 2021 compared to the same period in 2020. According to Vic Jennels of ASTL, “this reflects the huge potential that the market will transition a to provide clients with financing solutions in these difficult times “.
Some in the market believe bridging financing will get a welcome boost in the coming months, as the property market adjusts to the end of the pandemic and UK planning laws take account of the need. changing realities. “Covid is likely to wreak havoc in the department store and office market,” said Colin Sanders, CEO of Tuscan Capital. “Given a reasonable approach to urban planning regulations, this could give new impetus to investors and developers, not to mention much-needed city and downtown housing for private use. They argue that the appointment of Michael Gove as Housing Secretary could herald a significant shift in approach, opening up new development opportunities, with office and commercial space converted to residential properties, helping to ease the housing crisis. lodging.
While the UK property market remains very dynamic, the availability of both bridging finance and re-bridging is expected to remain high. “We believe that re-bridging offers positive options to the market, benefiting lenders and developers,” says Stephen Clark at Finbri.
For the original report, please visit https://prdistribution.com/news/bridging-refinancing-boosted-by-covid-and-brexit-2.html
CONTACT: Media Company: Finbri Limited, Media Name: Stephen Clark, Media Phone: +44 1202 612934, Media Email: [email protected] Media URL: https://finbri.co.uk/