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Predicting the Future of Regulated Bridge Lending as It Continues to Decrease

2 December 2018 No Comment

“If you can look into the seeds of time and say which grain will grow and which will not, speak, then, to me.” So says Banquo, as he and Macbeth have their fateful meeting with the Witches in Shakespeare’s tragedy. Indeed, part of the tragedy of the play can be argued to be the fallibility of human prophecy. Macbeth acts upon what he believes to be an accurate forecast of the future, with disastrous results.

The same holds true when it comes to forecasting the future of the lending market. True, our forecasts aren’t predicated upon questions concerning free will vs. fatalism, and the usurpation of thrones is hardly the endgame here. Even so, when it comes to the world of lending and finance, being able to say “which grain will grow and which will not” is of the utmost importance. At the same time, it is prudent to practice caution when acting upon that lending advice.

With that in mind, consider the case of regulated bridge lending dipping in recent quarters, and how that might bode for the lending industry in the near future.

What Is Regulated Bridge Lending?

For those not in the know, regulated bridge lending refers to a type of loan which is typically short-term in nature, property-backed, and secured against the property of the borrowing party. There are many possible permutations to this, but these three aspects are the main points.

Reasons for Obtaining a Regulated Bridge Loan

There are several reasons which are speculated to have been responsible for the recent decline of this form of lending, not the least of which being the rise of other forms of loans. Legal charge lending has gained by as much as 84% throughout Q3 of 2018. By comparison, second charge loans have decreased in that time by as much as 16%. Mortgage delays ranked as yet another reason that this type of loan has decreased, with that down by as much as 20% in the previous quarter.

Adding Value

The most popular reason to seek out a bridging loan has long been refurbishment of one’s home. Even with changes to the industry as a whole, that particular trend has remained strong. The past few quarters have seen refurbishment remain the #1 cause of individuals seeing out a regulated bridge loan. While the precise cause and nature of those refurbishment projects naturally vary, the fact that this trend has remained strong despite the other changes in the industry is noteworthy.

Declining Interest Rates

Finally, it’s worth noting that the interest rates for regulated bridge loans have dropped to around 0.8% in this time frame. Likewise, the amount of time taken to complete an application for a regulated bridge loan has jumped to around 46 days.

One possible explanation for this slowdown in regulated bridge lending? Brexit. Industry experts have speculated that consumers may be waiting to see how Brexit ultimately sorts itself out before committing to financial moves as significant as a regulated bridge loan.

And when it comes to Brexit, as with regulated loans and all speculations about the future, “to look into the seeds of time and know which will grow and which will not” is a task best left to witchcraft, even as regulated bridge lending remains an intriguing option going forward.

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