It seems that the ongoing saga of Brexit is doing little to dampen the growth of the bridging sector. In the most recent lending figures compiled by auditors from data provided by members of the ASTL, it was confirmed that bridging loan books grew to a record £4.62bn at the end of the second quarter of this year, representing growth of 11.7% compared to Q1 2019 and an increase of 14.4% on the same quarter last year.

Bridging loan applications also hit a record high in the 12 months preceding the end of Q2 2019, with £22.13bn of applications representing a 9.7% increase on the same period the previous year.

These are strong results, particularly given the uncertain politic and economic environment, but it is very important that we do not get carried away. Record lending is all very well, but if it comes accompanied by the ignominious collapse of lenders, as we saw with Lendy earlier this year, then reputation of the industry will be damaged and the sustainability of lending such volumes should be questioned. The challenge for the industry now is to continue this level of activity whilst maintaining high standards of underwriting and customer focus.

This is particularly important as it looks like the writing is on the wall with regards to regulation of the short-term commercial lending sector. At the end of July, the House of Commons Treasury Committee urged HM Treasury to extend the remit and powers of the FCA to unregulated SME lending, amongst other areas.

The concern is than when regulation does come, it will be targeted at the lowest common denominator to those organisations that exhibit the most questionable practices. This means that it won’t be light touch and it will impact the whole market. This may protect some customers, but it will also be to the detriment of many more and stifle innovation in this vibrant sector.

There is, however, good news. We have a window of opportunity to influence the shape of regulation and demonstrate that we are collectively a responsible industry that operates with the best intentions of our customers at our heart. And we are doing this from solid foundations in a growing market.

Lenders may feel competitive pressures, given the over-supply of funding, but there is still a good level of demand and the market is in a healthy state. We must use this as a foundation to build the next chapter of development and this is why it is so important that we agree across the board to a code of conduct that protects our investors, our borrowers and our sector.

My, admittedly biased, opinion is that there has never been more need for an organisation like the ASTL to take the lead and ensure the industry follows a code of conduct that ensures customers get the best deal, are not misled, and can encourage the FCA to take a pragmatic approach to regulation.

We have many challenges ahead of us, but at least we are facing them from a strong foundation.

Benson Hersch, CEO of the ASTL
A version of this article appeared in the September edition of Bridging Introducer

 

 

The Association of Short Term Lenders (ASTL) has announced a new Board of Directors following a voting process amongst members to elect the new Executive Committee.

The new Board is effective from 1 September 2019 and includes five lender member representatives and one associate member representative, plus the CEO. The elected Directors will serve as Executive Committee members of the ASTL, acting as a guiding influence to provide direction and decision-making for the Association.

The elected Executive Committee comprises of Allan Kay (Alternative Bridging Corporation), Steven Barber (Bridging Finance Solutions), James Bloom (Masthaven), Gavin Diamond (United Trust Bank). Sarah Jackson (Pivot) and Jonathan Newman (Brightstone Law) complete the Board having previously been elected to serve two terms.

Benson Hersch, CEO of the ASTL, says: “The Executive Committee of the ASTL plays an incredibly important role in helping to shape the future of the bridging industry. This is the Board who will provide a consistent presence as we enter an exciting period of change under a new CEO and I welcome all of the new directors who I look forward to working with during my remaining time in the role.

The election was very close, and we would like to express our thanks to all members nominated who stood for election, and of course we thank ASTL’s lender members who voted.”

Press Release: Wednesday, 4th September, 2019

Bridging loan books grew to a record £4.62bn at the end of the second quarter of this year, representing growth of 11.7% compared to Q1 2019 and an increase of 14.4% on the same quarter last year. 

Bridging loan applications also hit a record total in the 12 months preceding the end of Q2 2019, with £22.13bn of applications representing a 9.7% increase on the same period the previous year.

This is according to figures compiled by auditors from data provided by members of the Association of Short-Term Lenders (ASTL), which confirmed that more than £1bn of bridging loans were written in the second quarter of this year, an increase of 11.8% on the previous quarter and a rise of 4.1% on the same period last year.

There were £5.69bn of bridging loan applications in Q2 2019, which is 4% lower than the first quarter of the year but 5.3% more than the same period in 2018.

Benson Hersch, CEO of the ASTL says: “The second quarter of this year has delivered some very strong results for bridging lending, with record values both for applications over a 12-month period and total outstanding loan books. In fact, nearly all measures were higher than last quarter and the same period in 2018. The wider political and economic environment remains uncertain and the challenge for the industry now is to continue this level of activity whilst maintaining high standards of underwriting and customer focus.”

The ASTL Data Survey: Q2 2019

These figures are taken from the responses from ASTL members, which include most of the key lenders in the bridging market.

 

 

PRESS RELEASE WEDNESDAY, 14th AUGUST 2019

Whitehall Capital has become the latest lender to join the Association of Short Term Lenders (ASTL).

Whitehall Capital is a specialist bridging, short-term finance, auction finance and development finance provider with more than a decade in the market.

As part of its membership of the ASTL, the lender has signed up to a code of conduct, which includes treating customers fairly and requires that all fees are proportionate and openly disclosed.

Anthony Bodenstein, Founder & Managing Partner at Whitehall Capital, says: “Whitehall Capital is extremely pleased to step under the ASTL’s umbrella and join a number of other reputable lenders who uphold the high standards of the association. This is a vote of confidence in what we have achieved thus far and will no doubt help us further strengthen our market offering.”

Benson Hersch, CEO of the ASTL, says: “We are delighted to welcome Whitehall Capital as the latest lender to join the ASTL. As with all of our members, Whitehall Capital has demonstrated a customer focus and commitment to high standards that will help to advance the reputation of the industry.”

Press Release: Wednesday, 21st August 2019 

ASTL members reported that bridging loan applications totalled more than £5.96bn in the first quarter of this year. representing growth of 13.6% compared to Q4 2018 and an increase of 6.9% on the same quarter last year. However, the value of completions during Q1 2019 was £898.5m, which represented a 13.1% decrease on the same period last year.

This is according to figures compiled by auditors from data provided by members of the Association of Short-Term Lenders (ASTL). The numbers reveal that bridging lender loan books reached £4.14bn in Q1 2019, an increase of 7.9% compared to Q4 2018, although slightly down on the same period last year.

So, what does this tell us about the current market?

First, it is worth noting that Q2 figures are often more positive than Q1 figures and so we should expect the value of completions to increase in the next set of results. But, for now, the difference between application and completion volumes indicates a significant proportion of cases that are not proceeding through to completion.

This is likely to be due to a combination of continued unrealistic valuation expectations from borrowers and brokers taking advantage of the competitive lending environment by submitting applications to multiple lenders in the expectation that one of those lenders will find a way of making the numbers stack up.

The faltering market is driving demand for bridging loans to fund the gap between property transactions and the lack of liquidity in the market means that borrowers are taking longer to secure an exit, so loans are staying on lenders’ books for longer. The standard length of a bridging loan is now creeping up to 11 or even 12 months, when recently it was just nine months.

Consequently, lenders are assessing applications with more scrutiny and the lengthening of the life of a bridging loan is reflected by a longer application process. It is now the norm for a bridging loan to take between six and eight weeks to complete from application and it’s not unusual for an application to take months.

It’s important that brokers understand this situation at the outset so they can manage the expectations of their clients, but also so that they can mitigate for the risks presented by a longer application process.

The longer it takes for a case to progress from application through to completion, the more opportunity there is for circumstances to change from both the borrower and the lender sides.

We have seen a number of incidences recently of lenders pulling deals and so certainty of funding is an increasingly important consideration for brokers when it comes to choosing a lender. The market is awash with choice, but not every lender will have robust and consistent funding models, so brokers need to do their homework and be careful about which lenders they pick – certainty is a key consideration for both them and their clients.

Benson Hersch, CEO of the ASTL
A version of this article appeared in the August edition of Business Moneyfacts (web)

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