Bridging Loans - UK - August 2015
“Although the bridging loans industry has traditionally been largely unregulated, stricter regulation in the wider lending market has led to many bridging lenders becoming wary of their operations, though they are still taking full advantage of opportunities presented.”
– Lewis Cone, B2B Analyst
This report answers the following key questions:
- What are the key determinants driving the bridging loans industry?
- Was the market affected by the financial crisis? Has there been any structural changes as a consequence?
- Has regulation restricted industry development?
- Can the sector withstand competition from other lenders in the years ahead?
- What does the future hold for bridging finance?
The sector has shown strong growth over tt 12 months and expectations are high for the remainder of this year and 2016.he las The time when bridging loans were just used to ‘bridge the gap’ between a purchase and the sale of a residential property are over. There has been an increase in reasons why short-term liquidity is required by borrowers, which has expanded the number of bridging finance lenders and the diversity of products. Even as mainstream lenders start to expand operations again, including major banks, the increase in regulatory measures and the convenience of bridging finance means the sector is unlikely to diminish in importance for the foreseeable future.
A bridging loan is a flexible, short-term loan usually secured against property, where the borrower agrees to pay back the loan plus interest by an agreed date. They are typically used to provide finance for property purchases while a borrower is awaiting the completion of a contingent sale of an existing property, or simply where other finance is scarce.
Since bridging loans are usually offered on the basis of the security and the proposed exit rather than the borrower’s ability to meet regular repayments, bridging can assist in a wide variety of situations.
The following sectors make up a large proportion of the bridging loans market and are quantified in this report:
- Second Charge
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