Avamore Capital releases first industry report

By Zuhair Mirza, principal at Avamore Capital

Here at Avamore Capital, the specialist bridging and development lender, we are pleased to release our first ever industry report. After collaborating with brokers from across the sector, we have compiled a selection of trends and thoughts for H1 2018 along with key predictions for H2. The report covers development finance and the unregulated bridging sphere. Key figures examined are the average LTV, LTC and loan life seen across the market in H1. Additionally, the report includes our perspective on key trends and issues.

For development finance, brokers claimed that the average GDV has been relatively consistent at around 65%. The market stated that the average loan term was 18 months with an expected rise to 24 months. The figure likely to spark the most conversation is the average interest rate for development finance, at around 0.7% pm / 8.5% pa. For unregulated bridging, brokers agreed that pricing is set to remain consistent as we head into H2 and the average monthly interest rate is around 0.65%. Furthermore, brokers have seen cheaper bridging being the key product in H1 2018 as a result of the market attracting an increasing number of lenders.

The report also highlights some interesting predictions for H2. The surveyed brokers expect a rise in the number of bridge-to-development products with borrowers looking to use the same lender from acquisition all the way through to completion. Transaction volumes are likely to remain relatively consistent for the rest of the year; more deals are going through compared with 2017 due to a greater understanding of the housing market and in turn there is less reason to act fast.

We also offer our own insights into H2 trends. We cover topics such as the rise in construction risks due to a fall in EU migration squeezing the availability of labour, predictions around a slowdown in the sale of completed projects and comments on whether more mergers will be expected to take place between bridging finance providers. The report aligns with Avamore’s commitment to contributing education and thought leadership to the whole industry. The lender hopes that it will be a useful guide for developers and brokers as they enter H2, and looks forward to working with more of the market to produce insights.

The Avamore Capital H1 report can be viewed here.