According to the latest Bridging Trends report, total bridging loan transaction completions for Q1 came out at £156.78 million - a significant increase of around 8.5% compared to the same period last year.
Evidence suggests that more borrowers than ever before are using bridging finance to speed up and simplify property transactions, avoiding the complications and delays involved in arranging a traditional mortgage.
For four quarters in a row, the top reason for bridging finance in Q1 this year was purchasing an investment property - 26% of all bridging loans issued were used for this purpose. Second in line was bridging finance for speeding up property purchases, accounting for 23% of all loans issued during this period.
The costs of taking out a bridging loan also decreased during the first three months of the year - down from 0.77% at the end of last year to a new average of 0.71%. Demand for regulated bridging loans is also on the up, which accounted for 43.9% of all loans issued - up from just 36% in Q4 2021.
Interestingly, bridging loans for business purposes saw the greatest decrease in demand, accounting for just 10% of transactions in Q1 2022, down from 15% at the end of last year.
Borrowers Continue To Seek Innovative Alternatives
Speaking on behalf of Sirius Property Finance, Head of Corporate Partnerships, Kimberley Gates, expressed little surprise in the stellar performance of the bridging sector in 2022 so far.
“It comes as no surprise that bridging loan transactions have increased again from the previous quarter – the property market continues to be turbulent for a variety of well-publicised reasons so borrowers are looking for increasingly innovative ways to structure their debt,” she said.
“The stigma surrounding bridging also continues to subside as more investors, developers and homeowners are starting to see it as a useful tool for realising their real estate goals and no longer as a last resort.”
Likewise, Head of Bridging at Clifton Private Finance, Sam O’Neill, spoke with confidence about the direction the sector as a whole is heading in:
“It’s good news across the board…increased borrowing and lower rates – what’s not to like? Gross lending being substantially up isn’t a surprise, looking at our figures, enquiries are up, applications are up, and completions are up,” he said.
“The increase in chain break transactions and regulated bridging is another positive sign. An increasing number of homeowners are seeing bridging finance as something they can confidently rely on and trust as a viable financial product. When looking for reassurance that the industry is going in the right direction, we can’t ask for more positive feedback than that.”
Cash Is King
Dale Jannels, MD at Impact Specialist Finance, highlighted the important role bridging finance is playing in helping homeowners opt out of traditional property chains and complete transactions without the usual delays or complications.
“This latest Bridging Trends [report] highlights more than ever that cash is king,” he said.
“This applies to homeowners wishing to get their offer accepted before they have sold their own property, as well as investors wanting to raise funds quickly to invest in stock or refurbish existing to achieve better yields for example.”
“The shortage of suitable housing stock will undoubtedly drive increased volumes in the bridging sector for the foreseeable future.”
Insurance technology company Zelros is using AI in exactly this way to analyse data on consumer behaviours to make hyper-personalised recommendations. In 2021, they had coverage for up to 250 million policyholders globally and were able to determine where people were lacking insurance coverage. The data enabled them to make 10 million personalised insurance recommendations to individuals and families in 2021. This data provides a glimpse into the economy and what areas of people’s lives are changing the most. Now in 2022, the recommendations for Q1 are providing insight into what’s changing now:
JAN | FEB | MARCH
Car | 2.86% | 0.10% | 0.03%
Credit Insurance | 19.95% | 19.92% | 19.07%
Health | 14.95% | 13.99% | 14.11%
Home | 30.42% | 32.42% | 32.33%
Legal Protection | 7.15% | 6.03% | 6.11%
Life Accident | 24.61% | 28.38% | 28.31%
Term Life | 0.07% | 0.06% | 0.04%
With the data on these policy recommendations spanning over the first three months of 2022, it’s interesting to note the value drops and gains of what is being recommended and when. For example, for motor vehicle coverage, it has continued to fall month after month starting at 2.86% of recommendations in January to only .03% in March. Meanwhile, credit insurance, health and legal protection all dropped for the month of February but have slightly risen for the month of March. Recommendations for home insurance rose exactly 2% from the first month of the year to the second.
Overall, when looking at the data provided for Q1, the changes from February to March aren't nearly as drastic as those from January to February. The top three categories are credit insurance, home and life accident. Together, these three are making up roughly 80% of all insurance recommendations. As we’re now into Q2, it’ll be interesting to see how the data flows for the first six months of the year, and then to compare it with the end of the year results once we hit Q3 and Q4.
How does hyper-personalised insurance work with AI?
When we get our insurance, we often think that what we’re getting is hyper-personalised to us, but this is not usually true. Historically, agents are trained to cover the bases of what the average person needs, but this has nothing to do with your specific current needs. They can ask questions and make a personalised recommendation based on what you tell them, but hyper-personalisation through AI takes this to the next level.
Hyper-personalised insurance uses artificial intelligence to make specific recommendations to a policyholder based on what is happening in their life right now. With roughly 2.5 quintillion bytes of data being created every single day, a portion of that information is valuable consumer information that is being used to teach AI how to draw conclusions about what people need and want before the thought even crosses their minds. This data can be analysed to help an insurance agent determine if their client (aka you) has had a major life event that would signal a need for new insurance coverage or the re-evaluation of an existing policy. For example, AI could help determine if you’ve moved to a new address and would need to revisit your property insurance coverage to ensure your risk category is still the same and your policy still covers you. It could be used to show the birth of a child, which would prompt an agent to ask specific questions about this to see if life insurance is now needed.
Hyper-personalisation can also include telematics data that makes your policy specific to just you: for example, an auto policy based on your unique driving history. Cars are now so technologically advanced that insurers can provide behaviour-based insurance, so your rates become based on your driving behaviours only, not the pool of driver data used to determine a standard policy.
Why hyper-personalisation is important
- Better customer experience
- Best policy premiums possible
- Proactive outreach from insurance agents and having smarter conversations
The leveraging of AI and machine learning to meet our needs is a reality now in the insurance industry. It’s helping recommend to those without adequate coverage, to reevaluate risk assessment, and to help make sure that policyholders have the best premiums possible. AI is giving insurers the unique ability to create hyper-personalised suggestions for people in a way that has never been seen before. It’s best that the entire industry jump on now, or face being left behind and never catching up.
About the author: Paul-Henri Chabrol is Chief Product Officer at Zelros.
Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
Amazon
This week we are seeing Q1 earning results from 175 of the S&P 500 companies including big tech results from Microsoft, Google and Meta. Companies like Apple have thrived in the new year and reached all-time record earnings this quarter, continuing to make them an attractive investment for traders.
One to watch will be Amazon’s earnings report. Much like any other online-based service provider and seller, Amazon saw a boost in sales during the last two years due to Covid and lockdown affecting consumer behaviour. However, now that things have settled, recent UK sales reports are showing online sales falling noticeably across the board.
AMZN is currently down 23% from its November 2021 high and investors are keen to see whether their earnings show that things are picking up or slowing down.
Amazon’s 18% stake in electric vehicle maker Rivian last quarter helped “juice” their gains, however, Rivian’s recent struggles surrounding botched price hikes and supply chain issues may affect the big tech’s profitability, as Rivian is now consequently trading at near all-time lows.
Additionally, Amazon’s fuel and inflation surcharge come into effect on April 28th to combat rising prices. Alongside the unionisation situation, it has had to deal with in Alabama and now New York, this may likely affect stock prices.
On the offset, Amazon Web Services has been a key profit driver for Amazon in the last quarter with Amazon’s cloud sales growth hitting 40%.
In any case, investors will need to closely consider Amazon’s earnings in comparison to the other big tech giants to make a decision on their trading.
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Shares were up by as much as 6% in after-hours trading following the news.
Automotive revenue hit $16.86 billion, up 87% from the same period last year. Meanwhile, automotive gross margins soared to a record 32.9%, with the EV company reporting a gross profit of $5.54 billion. Regulatory credits made up $679 million of Q1 automotive revenue.
Tesla said revenue growth was pushed forward partly by an increase in the number of vehicle deliveries, as well as an increase in average sales prices.
Earlier in April, Tesla reported making 310,048 vehicle deliveries worldwide for the first quarter. Its Model 3 and Model Y vehicles made up 95% of deliveries in the period ending March 31, 2022.
Despite ongoing disruption from the Covid-19 pandemic as well as the conflict in Ukraine, Tesla CEO Elon Musk remains confident that the company can grow at least 50% over figures from the previous year.
“It seems likely that we’ll be able to produce one and a half million cars this year,” Musk said.
Commercial real estate industry executives are optimistic about Q1 market conditions while taking a "wait and see" approach to new Administration policies and potential tax reform, according to The Real Estate Roundtable's Q1 2017 Economic Sentiment Index released this week.
"The Trump Administration and a new Congress are aiming to unshackle the economy by focusing on growth-oriented policies," said Roundtable CEO and President Jeffrey D. DeBoer. "As our Q1 Sentiment Index shows, leaders in commercial real estate are cautiously optimistic about what policy changes may bring, yet concerned about any potential unintended consequences that could threaten real estate's vast contributions to the US economy."
The Roundtable's Q1 2017 Sentiment Index registered at 55 — seven points up from the last quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] This quarter's Current-Conditions Index of 55 increased four points from the previous quarter, and rose 1 point compared to the Q1 2016 score of 54. However, this quarter's Future-Conditions Index of 55 rose nine points from the previous quarter and is up 10 points compared to the same time one year ago, when it registered at 45.
The report's Topline Findings include:
- The Q1 Sentiment Index came in at 55, a seven point uptick from pre-election Q4. Reacting to the new administration in Washington, many are optimistic about potential market opportunities and the US economy. Mitigating this optimism is concern around potential tax policy reforms.
- While optimism has been the most common reaction to the new Administration, many responders are employing a 'wait and see' approach. Most expect changes in the real estate industry as a result of the policies of the new Administration.
- Despite previous concerns about asset values nearing peak pricing, many feel that pricing has stabilized. Industrial properties are perceived as well priced while many are reporting a lessening of values for multifamily properties in gateway cities.
- Foreign capital continues to seek real estate investment opportunities in the US market. As a result, access to equity capital is plentiful. Construction lending remains challenging to secure, but for high quality, stabilized assets, financing is available with competitive terms. Asset pricing and debt constraints are concerning, general sentiment about the US market is neutral to positive. Gateway markets have been identified as past peak pricing but many secondary and tertiary markets are intriguing for value-add investors.
Although 36% of survey participants said asset prices increased "somewhat higher" compared to one year ago, 43% of respondents said they expect generally flat valuations a year from now — reflecting the view that many believe pricing has stabilized for certain property types. Some also noted that inflows of private capital currently favor equity to debt, dependent on the quality of the property.
DeBoer added: "The Real Estate Roundtable and its members want to advance policies that will spur job creation and economic growth, always guided first by research, data and reasoned analysis that inform policymakers' understanding of all issues, particularly when making choices that affect real estate. We hope our information will assist the policy discussion as lawmakers continue to charge forward on proposals that could have an enormous impact on our nation's growth, prosperity and national security."
Data for the Q1 survey was gathered in January by Chicago-based FPL Associates on The Roundtable's behalf.
(Source: The Real Estate Roundtable)
