Commercial Reporter speaks to Jonathan Sealey, CEO of bridging lender Hope Capital, about the possibility of regulation in the market and the future of interest rates.
Data released recently suggests that interest rates for bridging dropped steadily throughout 2016, making it a more affordable proposition - where do you see rates going in 2017?
I think headline rates will always look to be squeezed with the larger loan providers, but a borrower should never look just at rates when it comes to picking a bridging provider.
Yes, rates may be the first thing a borrower will think of, but what is the point in them trying to chase a lower rate if the lender with the lower rates will not be able to provide the funds in time or if that rate only applies to loans below a certain LTV or to borrowers with excellent credit history?
There are many factors which will dictate the interest rate a borrower is quoted from a lender. Whilst I do believe rates will come down slightly further in 2017, there is only so low they can go.
Increased competition will drive down rates and this can be very good for the consumer, but they must make sure they choose a lender that can complete a loan in the timescales provided and at a level which they require to purchase/refinance the asset in question.
With a host of new entrants to the bridging market in 2016, do you think we’ll see more innovation in the market this year? If so, in what ways?
I’m not sure if you will see more innovation as such, as there are only so many ways you can package and re-package the products offered within the bridging market. We may see more second charge bridging loans and competition may well push LTVs higher, but this is not really innovation.
With new entrants coming into the market it will certainly be to the benefit of the borrower however, as lenders will look to improve their service levels, which may see some lenders who don’t left by the wayside.
What do you think will have the biggest effect on the lending landscape this year?
Obviously, the continuation of Brexit will have an effect in 2017. However, this has actually led to increased activity for Hope Capital and some other specialist lenders since the vote last June. Especially for those with their own money as brokers know that any decision is backed up by the funds. Therefore I think that over the next year or so there will be a real rise in the number and success of principle lenders who are privately funded as they provide more assurety to brokers and borrowers.
Another issue that will have an effect on the lending landscape is regulation, which is always in the forefront of lenders minds. Even though most bridging activity is unregulated, there is always the prospect that this will change. There is also a big drive, led by the ASTL, to continuously raise standards in the bridging industry which has to be a good thing for borrowers.
What does Hope Capital have planned for this year - anything exciting you can tell us about?
Hope Capital has strong growth plans for 2017 and beyond. We are looking to move into much bigger offices to accommodate the ever-growing team and we will also intend to significantly grow our loan book.
We have a strong name within the bridging industry due to our exceptional service levels, and we feel the time is right to look to take Hope Capital to the next level.
And lastly - if you could see one headline about bridging, what would it be?
Shift in consumer perception brings bridging lending in line with mainstream