The economic uncertainty following the Brexit vote did not negatively affected the bridging loan financial sector in 2016, which had a successful year. Next year, the government is negotiating to leave the European Union, and this could impact the bridging loan lenders.
Jonathan Sealey, writing for the Financial Reporter in December 2016, predicts that in the next two years the bridging sector will be stable, but he does not expect that there will be much growth in the market.
Sealey points out that many lenders are financed through overseas investors, and some may pull out of the bridging market. Some bridging lenders have already stopped lending, but there are other firms that have started, so overall there may not be a shortage of bridging loans available. He does not expect demand for bridging loans to decrease and this could be good news for borrowers. High demand can fuel competition amongst lenders, which will keep fees and interest rates low.
House prices are expected to be stable in 2017, which means that the property market should be buoyant. The majority of bridging loans are for property-related purposes, either to complete house purchases or for refurbishment work, so the number of bridging loan applications should be stable.
Sealey summarises his predictions for 2017 as:
“Expect to see a tighter market, more competition, flatter property prices and ultimately flatter lending than we have seen this year (2016) both in bridging and in the mortgage market.”