As the mortgage and commercial finance market continues to struggle on, the bridging finance sector is enjoying a large increase in applications. As high street lenders pull out of deals or take a very long time to agree an application many borrowers are now turning to bridging finance just to see the transaction through. They eventually redeem the bridging loan after a few months via a traditonal remortgage. The tightening of credit has affected the bridging finance sector indirectly because loan to values (LTVs) have to be reduced as exit routes are alot harder to come by. With capital and rental values still falling in the commercial property sector, high street banks have vastly reduced their loan to value on commercial property transactions and increase the required rental coverage. This has caused bridging finance lenders to reduce their LTVs on commercial property finance as well in line with these exit routes. bridging finance gives the borrower an opportunity to take out finance for any purpose in a very short amount of time. The costs compared to a high street lender’s long term loan is high but the finance is only required for a very short term until traditional routes of lending are achieved by the borrower or as an interim until the asset is sold and profit it realised by the investor.

There will be a very large number of writedowns this year mainly from commercial property loans. During the ‘glory days’, many banks lent aggresivley at the top of the market and much of this debt is due to mature this year and next. Government borrowing has made it harder for banks to attract private funding. There have been some nightmare stories where banks have turned to borrowers and asked to for a large capital reduction on their debt in order to bring it in line within the loan to value ration (LTV). So who is currently gaining from the crisis? Private finance houses and boutiques have recently received a large number of lending enquires from investors wanting to pick up bargains to corporates who need help with thier cash-flow. Bridging finance firms and now seeing enquiries with lower LTVs and will be transacting more business and banks restrict thier lending criteria or take longer to assess credit applications.

Mayfair Bridging are offering a free watchphone with every deal completed under the 40% loan to value product.

as long as the loan amount is less than 40% of the OMV. the interest charged will be 1% a month and the broker will recieve a free watchphone.

please see the following link for more information

http://www.introduceruk.com/adverts/Mayfair/May09/E-Shot.html

According to the RICS Global Property Survey the immediate outlook for commercial property remains bleak. As commercial property finance remains very difficult to come by, we expect the capital values continue to fall. Some of the auction houses have reported a very high interest and above average success rates at selling as investors that cash rich seek out bargains. Due to the lack of credit for commercial property bridging lenders have no choice to but to drastically restrict their Loan to Value on commercial property loans and this trend will continue until credit conditons for this sector improves.

With savings rates under 1% on the majority of accounts getting any sort of income from cash is difficult. many savers are now deciding to park their cash in property and earn income buy letting it out.

According to RICS, April 09 sales and enquiries for purchase have picked up considerably. Although some housing figures have given mixe sign of a cat bounce, many investors are now predicting that we are very near the bottom of the market with some predicitng a recovery at the end of the year. Commercial property prices continue to fall as the lack of appetite for commercial property from commercial lenders has meant the majority of transactions require a very large amount of cash for it to happen. Unless this changes we predict the price of commercial property to fall further .

Mayfair Bridging has reported a surge in enquiries from brokers and introducers indicating there could be definate activity in the market. Director Shoaib Bux said, ”We are receiving many auction purchase enquiries and many investors are thinking that the residential market is near its bottom and now is the time to buy”.