Growth Anticipated in Bridging Finance Market, Says BDLA & Interpath

According to a survey published by Interpath and the Bridging & Development Lenders Association (BDLA) UK, brokers and lenders in the bridging finance sector expect market expansion but warn of increased loan completion delays.

A significant 62% of participants predict that yearly origination volumes will increase, with 92% believing that institutional funding will remain stable or increase over the next year.

There is also an agreement that average monthly loan interest rates would fall, with 62% of respondents citing this as a key market driver.

However, there is some concern, since 51% of respondents indicate that the average time to finalise a loan is increasing, owing to a slow legal process that causes delays.

The study also shows a negative prognosis for property recoveries, with 92% expecting foreclosure levels to remain the same or increase.

Furthermore, 51% of respondents reported that the average monthly interest rate for loans in the previous year was within 1.00% and 1.25%, and 8% reported rates greater than 1.25%.

The most prevalent loan-to-value (LTV) ratio ranged from 65% to 70%, followed by 60% to 65%. The typical size of a loan has climbed from £300k–£400k to more than £600k.

57% of respondents chose nine to twelve months as the usual loan period, indicating the market’s short-term nature.

Refurbishment was the most common reason for receiving a bridging loan, with downsizing coming in last.

The survey respondents indicated the most significant problems for their firm during the next 12 months. An increase in competition was the main obstacle, as reported by 60% of the respondents. This was followed by a reduction in property sales volumes and time to sell, with falling property values coming in third.

Nick Parkhouse, managing director and head of financial services deal advisory at Interpath, states: