Without bridging loans the recession could have been much worse
In recent weeks there has been many reports regarding rises in the amount of property sales, increases in property prices and also in lending. Figures being supplied are the healthiest for over 4 years, as finance criteria is eased making finding and obtaining mortgages and loans more achievable. In particular figures for bridging loans have shown further rises with many lenders reporting their best ever figures over the past quarter.
Leading up to the credit crunch, and subsequent recession, the UK was booming. Business for most was very good, property prices were strong and increasing, and there was plenty of money about. Then virtually overnight a series of events, mostly involving banks in the USA, changed all of this. A number of large lenders suddenly found their funding dry up and this quickly led to subprime along with self certification loans and mortgages disappearing from the market place. In addition 100 percent and other high loan to value mortgage and secured loan products also disappeared. The disappearance of so many finance facilities and the sudden tightening of criteria by most lenders, made obtaining finance much more difficult, and for many impossible.
All of a sudden individuals and businesses could not obtain the mortgages and loans that they required, meaning that property sales fell through and significantly decreased. Since people and businesses could no longer obtain finance in order to make the acquisitions that they required, demand dropped. As mortgages were severely hit, the property market suffered and property prices not only stopped rising, in most parts of the county values fell. In fact only certain parts of London have seen any increase in property values over the past 4 years.
Where many lenders have refused to lend, some businesses and individuals have turned to bridging loans in order to raise the finance required to complete purchases, or to raise capital secured against property already owned. There are many property purchases and other acquisitions that simply would have not happened if it had not been for the bridging lenders. Most of these deals would have no doubt made other subsequent deals possible, and so on. Therefore the writer does find himself wondering that had it not been for the flexible lending criteria offered by many bridging lenders, would the recession have been even more severe.