The Intermediary speaks to Gavin Seaholme, head of bridging and second charge mortgages at Shawbrook Bank to discuss the strength of the bridging industry, how bridging finance can help clients and the wider property market.
How has Shawbrook’s bridging proposition evolved over the past few years?
We have invested in expert people and technology to support our customer journey. We offer an unrivalled experience, with an expert underwriting and relationship team, supported by market leading products.
Earlier this year, we extended the MyShawbrook portal to the bridging product range. This streamlines the entire bridging application process by making instant integrated valuations and credit-backed Heads of Terms available to brokers at any time.
This digital transformation also brings with it the ability to instruct solicitors during the AIP stage and offer brokers a maximum loan calculator, which is more detailed than a traditional pass/fail decision.
It was recently claimed that bridging finance has a reputational problem, surely those days are behind the industry?
The market has moved on and has professionalised over recent years. With a vast array of banks and lenders offering a transparent products to professional investors, bridging finance is a tool that increasing numbers of investors use to maximise opportunities.
Bridging finance is a product that tends to do well in times of economic uncertainty. How is the market performing at the moment?
The market is strong with a high level of customer demand. Investors are using bridging finance to build and diversify portfolios and create either new stock or refurbish existing properties.
How have the increasing costs of funds impacted the sector?
Swap rates are rising and will impact funding lines, so the historically low rates the market maintains may have to shift to accommodate. At Shawbrook we have our own organic funding which enables us to continue to remain competitive but also reliable for our brokers.
With so many bridging lenders out there do you think we could see some market consolidation moving forward?
Yes, that is something we could see. That question will drive the market, but we’re also seeing more lenders moving into bridging to maximise returns. This is likely to become more noticeable as other products, such as buy-to-let, remain in a very low-rate environment.
What role can bridging finance play in helping borrowers retrofit properties to meet EPC regs?
It’s a great solution for investors to use and improve their properties. Our EPC Report highlights the issues and the areas investors need to focus on. At Shawbrook we have the products and expertise to support them.
Could you give us an example where bridging could be used for EPC improvements?
Working with a broker partner, Monarch Financial Services, Shawbrook supported a client with a £400,000 light refurbishment bridging loan to improve the EPC rating of their buy-to-let property.
The first charge bridging loan allowed them to secure a prime location flat in Manchester, despite its EPC rating of F. Once the work is completed and EPC improved, the client will then be able to move on to a BTL mortgage as planned.
With the cost-of-living crisis and continued global uncertainty, how do you think the UK housing market and economy will perform in the near term?
We have a very strong foundation in the UK property market. Inflation and rate rises may lead to a levelling off in the housing market, and we are already seeing some cooling in price growth.
There’s is still an entrenched issue of a supply and demand mismatch in the market. Without more stock in the market, its unlikely that demand will subside and prices cool significantly.
What can we expect to see from Shawbrook in the coming months?
We will be increasing our appetite in bridging while continuing to invest in technology, expert support, and a strong risk framework.
We recognise the importance of bridging finance to our customers, so with further product innovation, watch this space!
Following the success of the MyShawbrook portal, we will continue our drive to be the number one bridging lender in the market.
