Poor property valuations are causing bridging loans to fall through.
According to a survey of brokers by United Trust Bank, poor valuations are by far the most common reason for bridging loan proposals falling through (43%).
Valuation issues are significantly ahead of the next most frequent reason which is the customer changing their mind (16%).
Although over three-quarters (78%) of brokers dealing with bridging finance routinely complete more than half of their bridging loan cases, only 13% of brokers said that 90% or more of their bridging loan proposals complete.
Nearly half (49%) of the brokers who responded to the survey indicated that they now charge a fee even if the loan doesn’t complete, and a further 18% are considering introducing such fees.
Alan Margolis, head of bridging at United Trust Bank, said: “The results of this survey highlight more than ever how important it is for brokers to inquire more thoroughly into the details of a client’s property before instructing the valuation.
“For example, simple measures such as carrying out a quick comparison on a property sales website or even looking at the property on Google ‘street view’ might reveal something relevant to the property’s valuation which the client may not have mentioned.”
Meanwhile, Shawbrook Bank has launched what it claims to be the lowest-ever bridging rates.
It has cut rates from 0.75% to 0.65% per month on standard bridging and to 0.73% on refurbishment bridging.
The bank said the changes are available to all broker partners, with no additional fees for the client and no commission compromises for brokers.
It said: “These rates are for sensible debt levels and not just headline grabbers.”
Karen Bennett, head of sales and marketing, commercial mortgages, at Shawbrook Bank, said: “We are striving to make Shawbrook the lender to follow in 2013.
“These changes demonstrate just how serious we are about becoming a major player in the short-term loans market for property professionals.”
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