LendInvest has predicted a busy year for the bridging market, with prices and demand picking up in the latter half of the year after dipping when the stamp duty holiday ends on 31 March.
Justin Trowse, director of bridging at LendInvest, said that while the stamp duty holiday has increased demand and average property prices, he expects prices to drop after the holiday ends and the economy begins to feel the full impact of unemployment.
He said that this will pick up in the latter half of 2021, which will be another busy year for the bridging market.
Trowse said that more homeowners and first-time buyers may seek to relocate for more space in the suburbs and this should continue to drive transactions and lending, and demand for investors and developers to create opportunities in areas where there will be a shift of housing needs.
“2021 is going to be another busy year for the bridging market, it’s important that lenders are mindful of the lessons learned in 2020,” he said in a blog on LendInvest’s website.
“The first thing to remember is that the market is cyclical and eventually recovers. After the first lockdown in March 2020 things looked bleak, but then the flood gates opened in the summer, which prompted record applications across all product lines as the first lockdown subsided.
“£200bn of quantitative easing has been floating into UK banks, so they will be flush with cash, but the Bank of England won’t be paying higher rates for some time, so expect lenders to get more aggressive on price as the hunger to originate loans ramps up.
“I also wouldn’t be surprised if we may see some consolidation of lenders and new competitors popping up to serve those needs.”
Trowse added that for those which are approved by the British Business Bank, coronavirus business interruption loan scheme development exit deals will still be in demand as will the residential market ahead of the stamp duty deadline in March.
He added there will also be opportunities for commercial-to-residential conversions as the demand for new homes continues and that this should be aided by new planning reform.
“A key thing for all lenders to remember is that 2020 started with a UK housing crisis, and before Covid the Chancellor announced initiatives to fund further housebuilding,” Trowse said in the blog.
“New homes still need to be built and – despite any uncertainty that will remain – this is a reality that needs addressing throughout 2021.”
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