Donna Wells, Director at Envelop
We’ve seen no end of market turmoil over the past six to 12 months – and beyond – but guess what? Our phones are still ringing constantly, enquiries continue to flood in regarding a variety of property purchases/refinancing and transactions are completing on a daily basis.
The best advisers remain busy because they realise where business opportunities are being generated and how to service them. Be this on their own, or via the support of a trusted packaging partner. It should also come as no surprise to hear that many of these opportunities are emerging from the specialist lending marketplace.
So, with that in mind, let’s focus on some of these key areas which are generating new business.
Second charge
According to the latest figures from the Finance & Leasing Association, the second charge mortgage market returned to growth in June with lending up 3% by volume and 4% by value compared to the same month in 2022.
On a quarterly basis, lending in Q2 remains down 9% by volume and 10% by value compared to the same quarter last year. However, on an annual basis, lending totalled £1,504m in the 12 months to June, up 10% compared to the previous 12 months. The number of new agreements totalled 32,575 over the past year, up 5% on the previous 12 months.
The distribution by purpose of loan in June showed that 58% of new agreements were for the consolidation of existing loans, 13% for home improvements, and a further 23% for both loan consolidation and home improvements, figures which help demonstrate where demand lies across the sector.
Bridging
The latest Bridging Trends data for Q2 2023 highlighted that regulated bridging extended its market share from 46.2% in Q1 to 48.7% – the highest proportion since the 53% reported in Q3 2020 amid the stamp duty holiday. Furthermore, demand for bridging loans to prevent chain breaks remained the most popular use for bridging finance for the second consecutive quarter – at 24%.
It added that property investors and landlords returned to the market in Q2, with bridging loans for investment purchase purposes jumping from 15% in Q1 to 22% in Q2. This increase is likely due to investors and professional landlords taking advantage of a sluggish property market to purchase assets at a reduced rate.
To add further weight to this trend, Knowledge Bank recently reported that ‘regulated bridging’ had consistently appeared in the top two most searched for bridging terms over the past two years. The data also pointed to an increasing number of housing chains collapsing with a greater uptake in regulated bridging loans being used to enable people to break a chain and buy the property they are after, without being reliant on their own purchasers.
Development Finance
Despite facing significant hurdles, research from Shawbrook outlined that more than a third (34%) of property developers are said to have been able to expand their business over the last 12 months, a figure which demonstrates how they have remained resilient and flexible in the face of such a volatile market.
Although this hasn’t been without its fair share of challenges as, due to the impact of increased costs, 96% of developers stated that they have been prompted to make changes to their business strategy over the past 12 months, with a change in building materials (40%) being the most popular change. 39% have also built or are planning to build different types of properties.
Commercial
It’s evident that small businesses have been under unprecedented strain over the past few years, with the Covid-19 pandemic, the cost-of-living crisis and ongoing economic volatility creating persistent and cumulative challenges. Yet, a survey from payment technology provider, Dojo suggests that the majority of SMEs are looking ahead to the next 12 months with optimism. Two thirds (65%) of respondent were said to be confident about the outlook for the economy, a similar number (63%) assured about the end of the cost-of-living crisis and four in five (79%) confident about the outlook for their business.
While business leaders are optimistic about their prospects over the next year, they are also realistic about the challenges ahead, with hurdles cited including growing their revenue (43%), expanding to new geographies or opening new branches (36%) and broadening their product ranges (33%).
All this data helps outline some of the challenges and opportunities facing potential buyers, homeowners, property professionals and SME’s, not to mention how the intermediary market will continue to play a key role in delivering the specialist solutions which matter for these borrowers.
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