Looking forward

Roma’s sales director Steve Smith, and head of comms and networks Charlotte Rutter, discuss what lies ahead for the bridging market in the next 12 months

Those of us who operate in the bridging sector know how exciting the current market is, with high demand, growing volumes, and new entrants cementing short-term finance as a key part of the property funding mix.

No longer a niche product, now most mortgage brokers and financial advisers understand the benefits of bridging, and many are actively operating in the sector.

But, alongside all of this positivity lies clear challenges. On the ground, we’re seeing spiralling construction costs and delays as a result of Brexit, the pandemic, and the war in Ukraine.

This is an ongoing problem and there is nervousness about how long it will continue.

But it’s certainly not stopping bridging finance from happening, with demand incredibly high—particularly on development projects.

Development demand

We are seeing strength in the heavy refurbishment and ground-up sub-sectors of development finance.

It’s more challenging on the commercial side, but that remains very sector specific. Warehousing is strong, but office blocks and retail are certainly struggling.

We’re seeing some delays on projects in line with the wider market, but the majority—at least three-quarters—are still running on time. There’s no cause for panic.

What lies ahead?

Demand and volumes: Demand will stay high and volumes will increase. The market has been growing over the past decade, and this is unlikely to stop. We’ll see shifts, such as more commercialto-residential and semi-commercial conversions, with lots more brownfield sites being rescued and redeveloped.

Interest rates: We’ve held our bridging rates up until now at Roma, but it looks inevitable they will rise in line with wider interest rates. We have to remember that rates are still at around 0.7%— historically very low and certainly less than three years ago. Borrowing is still affordable.

Lending market: This is a developing market and I think we’ll see more consolidation over the next year, especially if funding lines dry up for some of the smaller and newer lenders. But, we can see new entrants coming into this sector, too, as it’s still hugely attractive. Products and service: We’re ripe for further innovation, and we think there will be some key product changes over the next 12 months. There’ll also be a focus on sustainability as offerings begin to take into account energy efficiency and price accordingly.

The economy is facing challenges—there’s no getting away from that. But, the fundamental supply and demand imbalance for housing in the UK underpins the bridging finance market, so growth will continue.

Property remains a fantastic way for investors to put money into something and create wealth as well as homes.

Find out more

See how we can help you and your customers find the right bridging solution at www.romafinance.co.uk

Your RomaFLOW Checklist

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