2024
9
UK Bridging Loans Market Report 2024
2024-06-03T11:01:10+01:00
REP10210FD1_D100_4EB6_8122_6F564953CA2B
1495
173393
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Report
en_GB
Bridging rates have crept up as the Base Rate remains unchanged, but lender competition has maintained demand for bridging The bridging finance industry carries a higher risk profile than other…

£ 1,495 (Excl.Tax)

Report Summary

Mintel’s UK Bridging Loans Market Report takes a close look at the UK bridging finance market, including information on bridging loan market size and forecast, as well as analysis of the competitive language and opportunities for growth.

Key Issues Covered in this Report:

  • The impact of the economic climate on bridging loans and how lenders and borrowers have reacted to changes
  • The estimated and forecast values of individual segments in the market between 2019 and 2029
  • Recent market trends and how they are affecting the use of loans
  • Lenders’ competitive strategies and recent industry developments
  • The opportunities and threats facing providers in bridging loans

UK Bridging Loans Market Overview

  • UK bridging loans market size: Mintel expects the value of the bridging loans market to reach £10.9 billion by the end of 2024 with 25% growth expected over the next five years.

Bridging rates have crept up as the Base Rate remains unchanged, but lender competition has maintained demand in the bridging loans market

The bridging finance industry carries a higher risk profile than other forms of lending and this additional risk has been priced into product offerings – particularly as the Base Rate remains at a 16-year high. However, increased lender competition provides borrowers with more choice and some lenders have placed greater focus on asset quality and loan book performance.

Property market stagnation will drive lenders diversification into new lending areas

Despite the industry’s substantial growth over the last decade, it accounts for only a small part of the total UK mortgage lending market. UK Finance expects gross mortgage lending to fall by some 6% in 2024, but it has forecast a slight increase in activity levels in 2025 alongside a modest improvement in affordability.

Speed and flexibility remain key drivers for growth in UK bridging loans market

The range of uses for bridging finance shows how borrowers and homeowners are becoming more aware of bridging’s versatility. Slow loan completion times continue to be a barrier for some transactions and this is where bridging finance can deliver a variety of quick financing options for both purchase and refinance purposes by utilising facilities such as automated valuations, internal solicitors and title insurance options.

Purchase the full report for a complete overview of the UK bridging loans market, including industry structure and comprehensive analysis from Mintel’s industry experts. Readers of this report may also be interested in Mintel’s UK Mortgages Market Report.

Report Scope

The following sectors make up a large proportion of the UK bridging loans market and are quantified in this report:

  • Residential – these loans are short-term, interest-only loans generally used to help meet an immediate financial need when dealing in the property market. Applications are often decided on the value of the property and exit strategy, more so than the ability to meet loan payments.
  • Commercial – loans that are similar to residential bridging loans but, for these types of loans, the overall use of the property in question has to be above 40% (not an absolute figure) commercial. The exit strategy usually involves refurbishing the property and then selling it or refinancing it onto a traditional commercial mortgage. These loans also cover more general business purposes such as providing working capital, financing tax liabilities, covering short-term cash-flow issues, etc.
  • Development – loans that tend to be used by property developers, private builders, individuals, partnerships, limited companies and limited liability partnerships. Funds are typically used to finance improvements to assets that help increase market value and marketability. These loans tend to cover development projects such as extensions, conversions of existing property into flats, and other structural changes.
  • Second charge – refers to loans secured by a mortgage/charge that ranks behind the first charge lender: that is, the security provided to the lender ranks second. A second charge loan will generally have a higher interest rate payable to the lhttps://docs.google.com/spreadsheets/d/1pL4WkcEkBv6JjHezx9LGHXI5ful5N9GCqZ3TEDHpljk/edit#gid=422036543ender than a first charge loan. For example, if a £100,000 home has a £50,000 first charge loan, a second charge may be secured against the remaining £50,000.

Meet The Expert

This report is written by Lewis Cone, Associate Director – Financial Services at Mintel. Lewis joined Mintel in May 2013 having graduated from the University of Southampton with a 2.1 BSc (Hons) degree in Economics and writes a range of industrial reports, from occupational health to the house building market.

With property market performance still being challenged by stubborn inflation and a high Base Rate, bridging loans continue to offer a viable alternative for many borrowers looking to complete transactions.

Lewis Cone - Research AnalystLewis Cone
Associate Director – Financial Services

Table of Contents

  1. Executive Summary

    • Opportunities for the bridging loans market
    • Promote variety of solutions bridging can provide to property buyers
    • Improve broker knowledge of bridging loans to maximise borrowing potential
    • Market dynamics and outlook
    • Market size and forecast
    • Market predictions
    • Bridging continues to perform well in difficult market conditions
    • Graph 1: market size and forecast for bridging loans market, in aggregated loans balances, 2019-29
    • Residential loans continue to account for largest proportion of the market
    • Graph 2: bridging loans market value, in aggregated loan balances, by sector, 2024
    • Loan purpose – 2024
    • Bridging continues to outperform wider mortgage market growth
    • Graph 3: ASTL gross mortgage lending estimates, 2020-24
    • Bridging rates rise to nine-year high with demand placing pressure on completions
  2. Market Dynamics

    • Market size
    • Current market situation
    • Bridging steers through tough property market…
    • …to expand market value once again
    • Property downsizing providing new avenue of demand
    • Market segmentation
    • Residential property challenges could lead to greater product diversification…
    • …but residential sector will still account for largest proportion of the market
    • Graph 4: bridging loans market value, in aggregated loan balances, by sector, 2020-24
    • Chain breaks maintain position as most common loan purpose
    • Loan purpose – 2023
    • Graph 5: bridging loans market value segmentation, by loan purpose, 2023
    • Loan purpose – 2024
    • Graph 6: bridging loans market value segmentation, by loan purpose, 2024
    • Market forecast
    • Bridging value expected to continue growing until 2029
    • Graph 7: forecast UK bridging loans market value, in aggregated loan balances, 2025-29
    • Lender competition and product expansion should dampen impact of rate rise
    • Residential loans will continue to dominate the market, but commercial loans expected to recover
    • Graph 8: forecast UK bridging loans market value, by sector, 2025-29
    • Commercial loans to record highest five-year growth
    • Segmented forecast analysis
    • Increase in property repurposing and sustainability drive will offer sales opportunities
    • Market trends
    • Residential property prices continue to stagnate…
    • …but homebuyer confidence remains providing bridging opportunities
    • House price indices show tentative signs of recovery
    • Graph 9: Halifax and Nationwide house price indices, by annual change per quarter, Q1 2015-Q1 2024
    • Bridging reaches all-time high share of total mortgage lending
    • Bridging continues to outperform wider mortgage market growth
    • Graph 10: ASTL gross mortgage lending estimates, 2020-24
    • Boom in auction purchases provides bridging sales opportunities
    • Regulated loan use rises whilst second charge use declines
    • Bridging rates rise to nine-year high with demand placing pressure on completions
    • Macroeconomic factors
    • UK exits recession in Q1 2024…
    • …although growth is expected to remain sluggish in 2024
    • Graph 11: real GDP first quarterly estimates, Q1 2022-24
    • Bank rate remains at 5.25%
    • Bank Rate stands at 16-year high
    • Graph 12: Bank Rate, 2008-23
    • Impact on the industry
    • Economic outlook
    • Market drivers
    • Residential property market outlook remains uncertain as interest rate cut expectations change…
    • …although optimism remains over sales activity that will provide lending opportunities
    • Residential property transactions overview
    • Residential property transactions fall for second year in a row
    • Non-residential property transactions
    • Non-residential property transactions also decline for the second successive year
    • Graph 13: number of non-residential property transactions, SA, 2019-20 to 2023-24
    • Company insolvencies hit 30-year high as debt and cashflow issues peak…
    • …providing bridging lenders with potential routes of support
    • Company insolvencies continue to rise in England and Wales
    • Graph 14: company insolvencies in England and Wales, 2019-23
    • Consumer Duty has increased focus on meeting customer need
  3. Competitive landscape

    • Industry structure
    • Industry background
    • Industry background (cont.)
    • Yada Yada Finance aims to improve industry messaging and connect clients with borrowers
    • Lenders seal further funding facilities…
    • …to widen product availability and expand growth
    • Major industry movements
    • Major industry movements (cont.)
    • Lender overview
    • Lender overview (cont.)
    • Competitive strategies
    • London Credit's 'Best 4 U' permits brokers to select the best offer for their clients
    • Lenders extend offerings to other parts of the UK
    • Together partners with Ncino to update its mortgage and lending operations
    • Title insurance limits raised by some lenders
    • Hope Capital improves and streamlines service proposition
    • Launch activity
    • BLEND launches exit bridge product for developers
    • Catalyst launch 'Go Dutch' initiative
    • KIS Finance launches packager division
    • Castle Trust Bank's 'bridge the gap' product targets borrowers nearing the end of current loan
    • MS Lending's 'day rate' product offers new short-term solution
    • LendInvest Mortgages reveals new 'house flip bridge' product and cuts rates
    • Funding 365 relaunches stepped bridging rates
    • Company profiles
    • Aspen Bridging
    • Recent company activity
    • Financial information
    • Market Financial Solutions Ltd
    • Recent company activity
    • Financial information
    • MT Finance Group
    • Recent company activity
    • Financial information
    • Shawbrook Bank
    • Recent company activity
    • Financial information
    • Together Commercial Lending
    • Recent company activity
    • Financial information
    • United Trust Bank
    • Recent company activity
    • Financial information
    • West One Loan
    • Recent company activity
    • Financial information
  4. Appendix

    • Report scope and definitions
    • Market definition
    • Market definitions (cont.)
    • Data sources
    • External data sources
    • Abbreviations
    • Abbreviations (cont.)
    • Methodology
    • B2B research methodology
    • Further sources and contacts
    • Trade associations
    • Trade magazines
    • Trade magazines (cont.)
    • Trade events
    • Trade events (cont.)

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