2022
9
UK Bridging Loans Market Report 2022
2022-10-29T04:04:12+01:00
OX1102591
1495
156985
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Report
en_GB
“With a recession likely, it is expected that more borrowers, developers and businesses alike, will turn to bridging to provide them with the means to still be able to complete…

UK Bridging Loans Market Report 2022

£ 1,495 (Excl.Tax)

Description

The UK Bridging Loans Market Report identifies consumers’ and commercial attitudes towards bridging loans, forecast values of individual segments and the impact of rising inflation on the UK bridging finance market. This report covers the UK bridging finance market size, market forecast, market segmentation and UK bridging trends.

 

Current Landscape: UK Bridging Finance Market

The UK bridging finance market has returned to pre-pandemic criteria and loan-to-value limits, and more lenders are expected to enter the sector to take advantage of opportunities in refurbishment and buy-to-let acquisition. With investment property lending through buy-to-let mortgages and commercial mortgages returning to stronger growth rates following the worst of the pandemic, there remains robust growth in the UK bridging finance market.

 

Key Industry Trends: UK Bridging Finance Market

Continuing inflation and higher mortgage repayments could dampen activity and make previous loan margins unviable, meaning lenders may have to raise base rates. Lenders in the UK bridging finance market must ensure that borrowers have sufficient exit routes, as the threat of defaults could rise.

UK bridging finance market size

  • The value of the bridging loans market has risen by 23% over the last five years.
  • Investment purchase is the lead loan purpose, with a 25% share of the UK bridging finance market value.

 

Future Bridging Trends

Macroeconomic uncertainty is the biggest challenge the UK bridging finance market will face over the short term. However, Mintel’s UK Bridging Loans Market Report indicates that there are future demand opportunities, particularly for commercial and development bridging loans. These loans are set to recover as property owners, and developers adapt to the new working environment. Also, as mainstream lenders are likely to restrict loans to specific sectors, bridging lenders must make the most of the vast opportunities available in other under-financed areas.

To discover more about the UK Bridging Loans Market Report 2022, read our UK Personal Loans Market Report 2022or take a look at our extensive Financial Services Market Research.

 

Quickly Understand

  • The impact of COVID-19 and current economic conditions on the UK bridging finance market and how lenders and borrowers have reacted.
  • The estimated and forecast values of individual segments in the UK bridging finance market between 2018 and 2027.
  • Recent bridging trends and how they are affecting the use of loans.
  • Explores the UK bridging finance market size.

 

Covered in this Report

Brands: Aspen Bridging, MFS, Octopus Real Estate. Shawbrook Bank, Together, United Trust Bank, West One Loans, Castle Trust Bank, Hampshire Trust Bank, Elysium Bridging, TBMC, Avamore, Lendlord, Fortwell Captital.
Products:
Closed bridge loans and open bridge loans.

 

Expert Analysis from a UK Finance Specialist

This report, written by Lewis Cone, a leading analyst in the finance sector, delivers in-depth commentary and analysis to highlight current trends in the UK bridging finance market and add expert context to the numbers.

With a recession likely, it is expected that more borrowers, developers and businesses alike, will turn to bridging to provide them with the means to still be able to complete projects and to maintain cash flow levels. Bridging lenders must ensure that borrowers have sufficient exit routes if they do enter loan agreements, as the threat of defaults could rise.”

Lewis Cone - Research Analyst

Lewis Cone
Senior B2B Analyst

 

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
  2. Executive Summary

    • Five-year outlook for bridging loans
      • Figure 1: Five-year outlook for bridging loans, 2022-27
    • The market
    • Aggregated loan balances forecast to rise by a cumulative 44% to 2027 although annual growth will diminish
      • Figure 2: UK bridging loans market value, in aggregated loan balances, by sector, 2023-27 (£ billion)
    • Bridging surpasses pre-pandemic level in 2022 as property market remains buoyant
      • Figure 3: UK bridging loans market value, in aggregated loan balances, 2018-22 (£ billion)
    • Despite the commercial sector rebounding, residential loans still dominate the market
      • Figure 4: UK bridging loans market value segmentation, in aggregated loan balances and by sector, 2018-22 (£ billion)
    • Investment purchases remain most common use of loan
      • Figure 5: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2021 and 2022 (% of bridging loans)
  3. Issues and Insights

    • Proposed changes to EPC requirements for rented homes will offer bridging opportunities
    • Some businesses remain unaware of wider funding options, and bridging could serve those who are rejected from traditional borrowing means
  4. Market Size

    • Bridging surpasses pre-pandemic level in 2022 as property market remains buoyant
      • Figure 6: UK bridging loans market value, in aggregated loan balances, 2018-22 (£ billion)
  5. Market Segmentation

    • Despite the commercial sector rebounding, residential loans still dominate the market
      • Figure 7: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2018-22 (£ billion)
    • Loan purpose
      • Figure 8: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2021 and 2022 (% of bridging loans)
  6. Market Forecast

    • Five-year outlook for bridging loans
      • Figure 9: Five-year outlook for bridging loans, 2022-27
    • Learnings from the last recession
      • Figure 10: Industry performance following the last recession, 2010-15 (£ billion)
    • Aggregated loan balances forecast to rise by a cumulative 44% to 2027, although annual growth will diminish
      • Figure 11: Forecast UK bridging loans market value, in aggregated loan balances, 2023-27 (£ billion)
    • Commercial and development loans to drive growth as residential property boom ends amidst worsening mortgage affordability and interest rate hikes
      • Figure 12: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2023-27 (£ billion)
  7. The Impact of the Economy

    • Recession fears emerge as latest three-month growth remains in negative territory
      • Figure 13: Annual GDP growth rate, 2017-22* (%)
    • Bank Rate rises for the sixth time in 2022 as inflationary pressures continue
      • Figure 14: Bank rate, 2008-22, by date of adjustment (%)
  8. Market Trends

    • Residential house prices continue to rise, leading to demand for larger loans
      • Figure 15: Halifax and Nationwide House Price Index, by annual change per quarter, Q1 2014-Q3 2022 (%)
    • Tightening mainstream mortgage lending criteria increases bridging’s share of total mortgage lending
      • Figure 16: ASTL gross mortgage lending estimates, 2018-22 (£ million and share of total mortgage lending)
    • Other trends
    • Regulated and unregulated loans
    • Average LTVs and split between first and second charge loans
    • Average interest rate
    • Average loan term
  9. Market Drivers

    • New stamp duty changes likely to drive property transaction surge whilst re-emerging non-residential property sector maintains bridging’s appeal
    • Stamp Duty changes
    • House prices
    • Residential property transactions
      • Figure 17: Number of residential property transactions, 2017-18 to 2021-22 (seasonally adjusted)
    • Non-residential property transactions
      • Figure 18: Number of non-residential property transactions, 2017-18 to 2021-22 (seasonally adjusted)
    • Company insolvencies rise as debt repayments grow alongside increasing cost burden
      • Figure 19: Company insolvencies in England and Wales, 2017-22* (number)
  10. Industry Structure

    • Industry development
    • FIBA and ASTL outline framework for industry education programme
    • Several lenders secure new funding facilities in order to expand offerings
    • Major industry movements
    • Lender overview
      • Figure 20: Bridging lenders’ activity and product detail, by lender, 2022/23
  11. Competitive Strategies

    • Shawbrook adds bridging to its digital application portal
    • Hampshire Trust Bank launches EPC refurbishment bridging loan
    • Castle Trust Bank invests in property originations platform with a focus on entering the regulated bridging space
    • MFS joins TBMC’s lender panel to accelerate growth
    • Avamore launches bridging finance calculator
    • Elysium Bridging and Finanze partner to launch revolving credit facility
    • Lendlord launches integrated auction tool
  12. Company Profiles

    • Aspen Bridging
    • Recent company activity
    • Financial information
      • Figure 21: Financial analysis of Aspen Bridging Limited, 2018-22 (£ 000)
    • Fortwell Capital
    • Recent company activity
    • Financial information
      • Figure 22: Financial analysis of Fortwell Capital, 2018*-20 (£ 000)
    • Market Financial Solutions (MFS) Ltd
    • Recent company activity
    • Octopus Real Estate
    • Recent company activity
    • Financial information
      • Figure 23: Financial analysis of Bridgeco Ltd, 2016-20 (£ 000)
      • Figure 24: Financial analysis of Fern Trading Ltd, 2017-21 (£ million)
      • Figure 25: Financial analysis of Nino Limited, 2017-21 (£ 000)
      • Figure 26: Financial Analysis of Octopus Co-Lend Limited, 2017-21 (£000)
      • Figure 27: Financial Analysis of Octopus Healthcare Development Limited, 2017-21 (£000)
      • Figure 28: Financial Analysis of Octopus Investments Limited, 2017-21 (£000)
    • Shawbrook Bank
    • Recent company activity
    • Financial information
      • Figure 29: Financial analysis of Shawbrook, 2017-21 (£ million)
    • Together Commercial Finance
    • Recent company activity
    • Financial information
      • Figure 30: Financial analysis of Together Commercial Lending, 2017-21 (£ 000)
    • United Trust Bank
    • Recent company activity
    • Financial information
      • Figure 31: Financial analysis of United Trust Bank, 2017-21 (£ 000)
    • West One Loans
    • Recent company activity
    • Financial information
      • Figure 32: Financial analysis of West One Loan, 2017-21 (£ 000)
  13. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • B2B methodology
  14. Further Sources and Contacts

    • Trade associations
    • Association of Short Term Lenders
    • Financial Intermediary & Broker Association (FIBA)
    • National Association of Commercial Finance Brokers
    • Trade magazines
    • Bridging & Commercial
    • Business Matters
    • Commercial Reporter
    • Mortgage Finance Gazette
    • Mortgage Introducer
    • Mortgage Strategy
    • Trade events
    • Broker Expo
    • NACFB Commercial Finance Expo 2023
    • National Landlord Investment Show (London)
    • National Landlord Investment Show (Manchester)
    • The Finance Professional Show

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This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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