FR: Bridging finance has been going from strength to strength recently and has seen significant coverage in industry press – why do you think this is?
Banks are still restricting lending and the MMR has meant that the process of getting a mortgage is even slower than it used to be, so it is natural that people will look for alternative forms of finance that will meet their need for speed or flexibility – especially if they need to move quickly on a property purchase.
At the same time the reputation of the bridging industry is improving all the time. The ASTL has done a lot to improve the reputation of the bridging industry. It has helped to raise standards, to fly the flag for responsible bridging and to promote the various uses of bridging finance which has helped significantly raise the amount of coverage in the industry press.
Many borrowers, especially property developers, are also educated about different forms of finance and they increasingly know what they want. Bridging can be more flexible, more bespoke and more entrepreneurial and so is getting a positive reputation for delivering when the more mainstream lenders cannot.
FR: What have been some of your company's key milestones over the past couple of years?
After starting with a relatively modest amount of funds to lend back in 2011, in just three years we have grown significantly and are now a key player in the market. By the end of 2013 we had increased the amount of funds we could lend by over 1,100%. The figures from the ASTL at that time showed that lending from all the members increased 40% year on year, so although we came from a relatively small start, we significantly outstripped the market in terms of growth.
This year we are again looking to outstrip the market; we intend to double the amount we lent last year, and we aim to double this once again by the end of next year.
We have also grown the size of our company; we have doubled our workforce in the last three months and are considering a presence in London. Our average loan size is now approximately £500,000 which is up from £200k at the end of 2012 so we are continually taking on larger loan sizes both residential and commercial. We have a nominal maximum loan amount of £1.5m, however as entrepreneurial principal lenders with our own funding, we can still offer more if we like a case brought to us.
FR: What does the rest of 2014 hold for you, and what do you foresee for bridging finance?
Where Hope Capital is concerned, we have a good solid team and we intend to spend the rest of the year consolidating this and growing our loan book. We are a national lender and, with our solid infrastructure behind us, our intention is to increase our penetration of the market. We are also considering an office presence in London at some point in the next year to help us to increase the amount we lend throughout the South East.
Where the market is concerned there are still new entrants coming in, which good for bridging if the incoming firms are reputable. In many cases smaller bridging lenders have an edge over the larger firms because, typically, they can be more agile, more flexible and can move more quickly. The market is obviously still growing and I believe that those lenders that offer a unique, bespoke service will flourish. A key requirement is for lenders to hold their own funds so they don’t need to go to an outside credit committee to ask if they can lend the money. Having our own money to lend is one area where Hope Capital really has a competitive edge.
Bridging lending will continue to grow over the next year. While bridging lending is, by its nature, short term so will never duplicate a mainstream mortgage, it does fulfil a very valuable need for people who need a loan for six months to a year and that is the need that the High Street lenders are currently failing to fulfil.
Bridging lenders of all sizes will continue to grow if they have the right service, the right infrastructure and the right funds behind them. Those who will probably not last will be those reliant on outside funding as the cost of capital increases.
Other bridging lenders are diversifying the products and services they offer, but we believe in concentrating on what we’re good at and so we will continue to focus on core bridging finance
FR: What challenges do you feel are most affecting brokers in the current market?
The biggest challenge facing brokers where bridging is concerned is education. While there are a lot of excellent bridging brokers, there are still a lot of mainstream mortgage brokers who do not fully understand bridging loans and how bridging can help their clients.
Brokers are increasingly affected by new legislation and there is more to come with the EU Mortgage Credit Directive just around the corner. Within the next year it is also likely that all brokers will need a consumer credit licence to do bridging.
FR: If you weren’t in the financial services industry, what would you be doing?
The sensible answer is that I would probably be a chartered surveyor as that’s what I’m qualified in. In a dream world I’d be a football pundit or I would paint lighthouses
