2016 Bridge Finance Lending Exceeds A Record £2.8 Billion

Throughout the course of the past five or six years, the bridging finance sector has undeniably gone from strength to strength, offering short-term loans which have risen from near anonymity to one of the most fashionable short-term borrowing products available.  As we head towards the middle of March 2017, UK Property Finance Ltd has recently issued a report publicizing yet another sharp surge in bridge loan lending activity throughout the closing quarter of 2016, which has increased the total amount of funds officially lent by the sector to a staggering £2.83 billion.

According to facts and figures released by the Association of Short Term Lenders (ASTL), there was a dramatic 26% increase in the overall value of bridging loan products issued during the last 3 months alone of the previous year, encompassing both domestic and commercial short-term borrowing markets.  This new total is a considerable improvement on the £2.59 billion lent by the industry throughout the course of 2015.

Remarkably, the prolific amount of uncertainty, both prior to and post-Brexit vote, which had a dominating influence across the UK financial sector as a whole, seems to have had no negative impact whatsoever on short-term borrowing, particularly in terms of dissuading applicants and lenders in the bridging loan sector.

“After a dip in volumes almost across the board in Q3 last year following the [EU] referendum, the size of the increase both in the quarter and across the year has overshot even my most optimistic expectations,’ commented Benson Hersch, CEO of the ASTL.

“I do expect volumes to rise again in the first quarter of this year, however, I expect the percentage increase to be lower compared [with] Q4, as this quarter’s figures very much contrast with the Brexit blues that affected people looking for bridging loans between July and September last year,”

“While lending by ASTL members didn’t quite hit £3bn, there are a number of bridging loans that fall under the radar, made by lenders that many people do not know exist, as well as those lenders who are not members, so the actual size of the bridging market is far larger.”

Whilst trying to decipher the root cause behind the increase in activity throughout this area of commercial finance, there seem to be three main active ingredients playing a key role.

Firstly, bridging loans are one of the most easily accessible borrowing products on the market.  Compared to mortgages and other secured loan types, a bridge loan can be approved and authorised in a matter of days, with the funds being released just as quickly.

Secondly, this particular type of finance is also highly flexible.  When you apply for a short-term bridging loan from an established provider such as UK Property Finance Ltd, the loan can be tailored from the ground up to fit your individual borrowing needs.  This is a vast improvement over the multitude of highly restrictive, off-the-shelf borrowing products offered by most mainstream lenders such as banks and building societies.

The third and final attribute behind the phenomenal success of bridging finance is the affordability factor.  With record-low interest rates starting at just 0.46% per month for bridge loan products with LTV ratios up to 50%, and the ability to roll-up any borrowing fees and costs until the end of the product lifetime when the entire loan is paid back in full via just one single repayment, it is hardly surprising that residential and commercial borrowers are choosing this type of finance as a go-to funding option. – https://www.bridgingloans.co.uk