Bridging lending grows by a quarter

Sarah Davidson

January 7, 2015

But growth has calmed, as in comparison at the end of 2012 the market’s value was increasing by nearly three quarters (73%) year-on-year.

In the two months to November 2014 gross lending stood at £433m, up from £397m in the same two months of 2013.

Duncan Kreeger, director of West One Loans, said: “The rapid rate of growth enjoyed by the bridging loan market has long outstripped that seen in other sectors and it was to be expected that the pace of this would level off at some point.

“We have now entered a more stable phase of development, but annual growth of more than 25% is still some going and proves that the market still has plenty of capacity for further improvement.

“As perception of the bridging industry continues to improve and awareness of the usefulness of the products spreads, then there is no reason why the sector can’t build on its previous successes and carrying on growing into 2015.

“We’ve seen high street banks regain some of their appetite to lend in 2014, but there still seems a certain reluctance to get things moving on the development front and bridging can help plug the gap as it has so effectively in the past.”

Loan volumes increased by 19.3% while loan sizes rose by 17.2% to average £508,000 in the year to November.

However average loan sizes have fallen since the summer, when your typical bridging loan was worth £581,000.

Kreeger added: “If just the volume of loans or just the average loan size were growing, then there would be the risk that all the sector’s future growth prospects were in one basket, but the fact that both are increasing in tandem shows that quality and quantity are both heading in the right direction.

“Bridging lenders are showing an appetite not just to support an increasing number of projects, but also to lend larger amounts where the circumstances demand it.

“The average loan size may be around the £500,000, but we have written a number of £1m plus deals over the past two months which shows that not only is there demand for significant bridging loans, but that lenders are not shying away from such sizeable loans.”

Bridging interest rates have become more competitive, as loans were priced at 1.16% on average in the year to November compared to 1.22% the year before.

On a bi-monthly basis average loan to values have inched up by 2.6% to stand at 48.4% in the two months to November.

Sign up to our daily email