Your views matter – broker thoughts on the biggest bridging trends

At the start of every year, the trade press is full of comments from lenders reviewing the previous 12 months and making predictions about what’s on the horizon.

This can be very valuable, of course, but at Castle Trust Bank, we like to do things a bit differently. We work in close partnership with brokers, so we understand that the cases we lend on often form only part of your overall business.

When it comes to identifying trends, brokers are on the frontline of client demand. So, we asked you about your experiences over the last year and your hopes for the future when it comes to the bridging market.

We will release the full results from our latest Castle Trust Bank Pulse Survey over the next couple of weeks, but in the meantime, here are some of the trends you experienced in 2023 and your expectations for 2024.

When it comes to bridging business volumes, you told us that 2023 remained robust, although demand from first-time property investors was either static, or down on the previous years.

The main use for bridging finance was quick property purchases and, when it comes to property, it’s clear that investors were targeting higher yields, with most brokers saying houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs) were the most popular type of property for bridging.

The least popular uses of bridging finance were found to be development exits and auction finance.

While the mainstream mortgage market was particularly challenging for brokers last year, our survey found that bridging brokers either maintained their staffing levels or increased the size of their teams.

And, perhaps unsurprisingly in an uncertain environment, certainty of decision ranked highly as a consideration for bridging clients when it came to choice of lender.

So, what are your expectations for 2024?

Our survey found that brokers are generally positive about the prospects for the year ahead, regarding bridging volumes and the outlook for their business, although few of you expect there to be a big influx of first-time investors this year.

There are, of course, clouds on the horizon and questions marks remain around the economic outlook. Our survey told us that you think the two biggest risks to a more promising year are continued high interest rates, and political uncertainty.

What conclusions, then, can we take from broker views back on 2023 and looking ahead to 2024?

From the first weeks of the new year, it seems that uncertainty will continue to prevail, at least for the coming months. The upcoming general election is likely to be later in the year rather than earlier and, whilst the year has started with mainstream lenders cutting rates, international unrest has put upwards pressure on swap rates.

Bridging, however, is a product built to finance periods of uncertainty, so there is little reason to doubt brokers’ optimistic view for the year ahead.

At the same time, as landlords continue to experience pressure on their finance, higher yielding investments such as HMOs and MUFBs are likely to grow in popularity. And, of course, in periods of uncertainty, everyone craves something certain, so those lenders that are able to provide this will continue to be in high demand.

My view on your feedback to our Pulse survey is the continued importance of strong partnerships. The future does look brighter, but there remain some hurdles ahead.

Last year, the most successful brokers were those who worked in partnership with their clients to help them succeed and the most successful lenders, were those who worked in partnership with brokers to enable this.

2024 will probably feel a lot like 2023, and we can all use the experience from the last 12 months to educate the approach we should take in the year ahead.

Anna Lewis is commercial director at Castle Trust Bank