While buy-to-let lenders come to terms with fresh interventions imposed by the Prudential Regulation Authority, designed to subject buy-to-let landlords to stricter lending criteria, business in one often-overlooked corner of the market is currently booming.
Demand for bridging loans – short-term secured loans designed to bridge a temporary cash shortfall when acquiring a property – has surged.
Bridging loans were once perceived as a ‘last resort’ lending option. But with a growing number of borrowers attracted to the greater flexibility offered by alternative finance providers, including no minimum term and no exit fees, it is now expanding significantly faster than the mainstream mortgage market.
Marc Goldberg, commercial CEO at specialist lender Together, commented: “We’ve seen strong demand from businesses and investors in this [bridging finance] area, and lent a total of £572.3m of bridging finance in the 12 months to 30 September 2016. Meanwhile, across the group, annual lending topped £1bn for the first time in our 42 year history.”
Bridging, known for its speed, offers much faster time to completion than high-street lenders, and so it follows that short-term finance is easily outpacing the mainstream mortgage market.
Together has just agreed a new facility of £90m, targeted at funding its bridging finance activity, which Goldberg hopes will enable the company to “further increase” its bridging finance lending.
Together’s latest rogramme, which is supported by Goldman Sachs Private Capital, will run until January 2021, with the underlying loans drawn from across its portfolio.
Commenting on the completion, Gary Beckett, group CFO of Together, said: “The successful introduction of the Delta facility demonstrates Together’s strong financial position, our robust business model and the continued demand for our products.
“It will support our growth plans and sit alongside our existing funding channels which include the £1bn Charles Street securitisation programme, the £255m Lakeside securitisation programme and our recent £375m capital markets bond issuance.”