Will Bridging Loan Lending Ever Return To Normal

As we teeter on the edge of recession there should be more bridging loan business than ever before
especially when the banks are either refusing to lend or are cancelling overdrafts and calling in their loans to SME's.

However the credit crunch is biting into the Bridging Loan market as well, as traditional lenders reduce their size of loans or
in some cases stop lending altogether.

The Bridging Loan Lenders that do remain are no longer non status lenders in the true sense of the word, but are wanting to lend to clients with good credit history and with little history of adverse credit. The remaining non status bridging loan lenders now only lend to a maximum 65% Loan To Value (LTV) of the
90 day value of the property and not the Open market Value (OMV).
This will probably equate to 55% of the OMV. Lenders that up to 18 months ago would lend on a pile of bricks are now looking extremely carefully at all non standard
properties and non standard construction
or design.

What then is the future of the Bridging Loan Industry? In reality the Bridging Loan Market is inextricably linked to the mortgage lending market.
If new mortgages are rationed or are extremely difficult to obtain then the majority of bridging Loans are not viable loans to the Bridging Loan Lender's as there will be no exit route for the borrower. The only Bridging Loan lending that will complete will be those loans were the exit route is by pre qualified mortgages offers
or where the funds are there but are not readily available.

This scenario will only change when property prices level off or start again to rise in value. This will then allow mortgage lenders to
increase their LTV's and to make LTV's over 85% affordable and assessable to the majority of applicants. Lending will only be truly back to normal
when the market for sub prime loans are once again available at LTV's of 75% or more for borrowers with a heavy adverse lending profile.

How long will the credit crunch last? Experts think that after a downturn in 2009 property prices Will level out and start rising in 2010.
But if we follow the time scale of the 1929 Great Crash then it was not until 1933 with the election of President Roosevelt
that things gradually started to change for the better. Industry did not really pick up again until the rearmament of Europe during the 1930's
and then with America entering the Second World War in 1941.