Mis-sold Mortgage Claims > Mortgage News
Could bridging be the new sub-prime
Mon, 22 Aug 2011
Bridging is certainly going through a boom period at this moment in time due to lenders flooding the markets and volumes rising as funding is restricted elsewhere.

Normally, bridging is the solution to quickly moving house without having to wait upon the sale of your own home.

The bridge is normally taken out to facilitate the move whilst your previous home is still on the market. This was usually a rather small-sector but now it has grown.

One of the reasons that bridging has grown is due to the lack of funding from mainstream lenders. Bridging has been used to replace funding as the usual big banks are taking a step back.

Hedge funds have flooded in to back lenders to make quick returns as bridging finance is an expensive business and the funds are only in the sector to make high returns.

However, the important question is whether or not bridging will last and what will happen when the major lenders finally make a return to funding developers and property investors.

Many in the industry compare the boom to the rush into sub-prime a few years ago due to that fact that even though many people have piled in to see this sector of the industry grow it is still rather niche.

Almost 90% of mortgage brokers commented that the boom can not last due to its instability.

In essence this means that those who got involved in bridging to create a quick buck will probably leave as soon as funding from major banks returns and bridging becomes that expensive last resort – once again.
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