Lenders predict bridging loan spree in 2013

 
Ben Southwood
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A DIFFICULT mortgage market will lead to an explosion in the use of short-term bridging loans, mortgage brokers said in a survey out this morning.

Though mortgage lending is set to expand some 8.3 per cent in 2013, according to Council of Mortgage Lenders (CML) predictions, the market will remain tight.

This tightness will drive a 36 per cent surge in the bridging loan industry, according to a survey of 400 mortgage intermediaries carried out by West One Loans, which co-ordinates short-term peer-to-peer lending.

“The mainstream market is going nowhere fast,” said West One chairman Duncan Kreeger.

“Even the eight per cent forecast from the CML seems hugely optimistic.”

But banks, “hobbled” by capital adequacy requirements and other regulatory constraints, will not be able to keep up for demand from a market that is “crying out for loans”.

“By the end of 2013, the bridging industry will be lending almost 400 per cent more finance than it was in 2010,” Kreeger predicted.

“By contrast, the high street will be lending just 11 per cent more than it was.”

But this continued tightness in mortgage markets was not showing in the cash-driven top end of the London market, where house prices were still cruising ahead, rising 5.3 per cent over 2012 according to Savills.

This puts prime central London prices 23.9 per cent higher than their pre-recession peak, with Knightsbridge leading the way with 41.1 per cent growth.

But absorbing new tax blows may keep price growth completely flat in 2013, the estate agent warned. This would turn back into growth by 2014, Savills research director Yolande Barnes predicted, to add another 1.7 percentage points to growth above the pre-recession peak by 2017.