Younger Borrowers More Open to Bridging Than Older Demographics

For the purpose of the study, the ASTL surveyed around 2,000 people spanning all consumer age brackets. Among whom, just 67% said that they had heard of the idea of bridging finance, of which most (35%) admitted they did not know how bridging loans can be used.

A recent poll conducted by the Association of Short Term Lenders (ASTL) details more on the finance sector.

From those polled most people in the UK are still unaware of how bridging finance works, if not the existence of the facility in its entirety. However, the figures collected by the ASTL also suggested that younger generations are more open to the idea of bridging than their older counterparts.

The ASTL report also suggests that almost 40% of those who are aware of bridging finance do not know how long it takes to apply for a bridging loan.  28% thought application processing times were as long as eight weeks, while around 30% said that two weeks was a more accurate time frame.

More than half of those polled (54%) were unaware that the bridging finance sector is regulated, while 27% said they believed that all bridging loans are overseen by the Financial Conduct Authority.

Importantly, fewer than 20% of those polled said that they were either fairly likely or very likely to take out a bridging loan in the near future. By contrast, 61% said it was unlikely they would enter bridging finance.

But there was an interesting disparity between the levels of interest in bridging finance demonstrated between the different age groups polled. While just 15% of those aged over 55 said they would consider a bridging loan, almost 35% of those aged 18 to 24 said they were open to the idea of bridging.

Expense Remains the Primary Concern

Among those who were either cautious or sceptical about the idea of bridging, almost half (47%) said that the biggest concern was the potential expense of taking out a bridging loan. 54% said that they did not know what kinds of interest rates to expect with bridging finance, while 10% thought that an APR of 10% or more was the norm with bridging.

“However, uncertainty, around who to turn to, and integrally, who to trust rise further amongst these groups. With their formative years spent in the aftermath of the global financial crisis, it might be interesting to see whether it is a general mistrust of financial providers amongst younger generations,” read an extract from the ASTL report.

Concerns regarding viable exit strategies were also widespread among those polled, with 32% saying they would worry about how they would pay off their loan. Almost 50% also said they would be hesitant to use bridging finance for chain break purposes, due to concerns regarding their ability to sell properties in time to repay their debts.

Interestingly, the negative image of the short-term lending sector of the past seems to have been shed almost entirely. Just 12% of those polled said that the “bad reputation” of the bridging sector of days gone by was an issue for them.

Meanwhile, the vast majority of prospective borrowers remain unaware of the benefits of applying for bridging finance via a specialist broker. According to the figures published by ASTL, just 21% said that they would speak to a broker before applying for bridging finance, while 36% said they would have no idea where or how to start the application process.

“There are many great brokers working within the short-term finance market, with ever more looking to break in as this sector goes from strength to strength. What we need is for prospective borrowers to understand their value and mainstream brokers to know where to refer clients,” commented Vic Jannels, chief executive of the ASTL.