The bridging and development finance markets will be key areas of specialty lending growth in the near future, said Jonathan Sealey, Managing Director of Hope Capital.
Sealey (on the picture) said that during the early stages of the pandemic, there was a slowdown in the real estate market. But from mid-2020, the bridge industry has resisted “during times of uncertainty and exponential growth in real estate transactions.”
As Covid-19 restrictions eased, Hope saw borrowers begin to look for opportunities to restart their investment plans.
âUnlike many industries that struggled to weather the storm, the bridging market did not,â he said.
He added, âAs we continue to navigate our way through and out of the pandemic, it will ultimately highlight which lenders have adapted to the changing needs of their clients and which have not.
“It is clear that the landscape for bridging lending has changed and will continue to change, however, it will be the lenders who will learn from this unprecedented time and have the ability to deliver tailored and timely solutions that will stand by the other. side.”
Looking ahead, Sealey said the market for bridges will continue to grow. The rate cut would come under scrutiny, adding that the rate cut was “only part of the competitive advantage that lenders were trying to achieve.”
Sealey said the low rates provided benefits to borrowers as they helped lower the overall cost of securing funds and helped finance other areas of the process.
He added: âUltimately, interest rates will undoubtedly continue to be a major factor in the market, but the importance for lenders to provide flexible products that meet the needs and demands of the market. borrower, high quality service and the assurance that the deal will go through. getting delivered on time will always be essential.
The appetite for bridging loans has grown in recent years as more and more lenders have entered the market. Hope expects this growth to continue.
âLooking at the industry as a whole, I predict that the appetite for bridging loans will only continue to increase. With the number of bridge lenders entering the market increasing each year, the number of brokers who are aware of and considering bridge financing will only continue to increase.
âIt is an exciting time for the industry. However, with that in mind, we need to make sure that we can meet demand by closely monitoring the market and investing in the right processes. “
Hope Capital was founded in 2011 and celebrated its 10th anniversary late last month. Since the opening of its doors, it has grown to 23 employees.
Present in England, Wales and Scotland, the lender offers a range of bridging, refurbishment, refurbishment, low cost lending and development finance products.
Sealey said that in the future he plans to increase his loan portfolio by focusing on a long-term recruiting strategy and launching more products.
âUltimately, we want to continue to be recognized as a specialty lender that brokers can count on and trust to complete the transaction quickly and efficiently,â he said.
He added that the company plans to expand its proposal into Scotland, a market it entered earlier this year.
âCurrently, we offer innovative solutions for residential, mixed-use and commercial real estate. However, we are now looking to help brokers and their clients who have renovation projects in Scotland by expanding our offering, âhe said.
Development finance is crucial for the specialist loan market
Sealey said that over the past year development finance has played a “crucial role in the specialist loan market“.
He said this was due to Brexit and the pandemic as investors and developers sought to push their plans forward.
He said: âIn the current economic climate, the development process is facing many setbacks due to the increase in demand and cost of building materials and the decrease in the available sources of labor.
âInvestors and developers tend to rely on development finance to fund a project, whether it’s covering the cost of construction or renovating a property. However, when the completions do not go as planned and the loan repayment deadline is passed, it has a huge impact on the profitability of a development, if the borrower is not then able to meet their expectations. existing financial obligations.
He said financing the exit from development was a “lifeline” as it allowed borrowers to raise capital and finance the next project after their current project was completed. The lender launched an inbound and outbound loan earlier this week to target this area.