Bridging industry cements lending over £2 billion
Gross bridging lending now totals £2.02 billion as of the twelve months to 1st March. This represents an increase of more than one quarter (26%) compared to the previous twelve months, according to the latest West One Bridging Index.
When measured on a bi-monthly basis, annual growth contrasts with a slight seasonal drop. Gross bridging lending of £343 million in the last two months is down 18% compared to November and December, when gross lending totalled £419 million.
Despite such seasonal factors, lending in this two month period, from 1st January to 1st March 2014, is up 23% compared to just £280 million in the same two months in 2013.
Duncan Kreeger comments: “Just as the UK economy has turned a corner, demand for the right type of finance is on an exciting new path. In the last few months the market for bridging loans has been dramatically busier than at the same point last year. Businesses need finance to invest and expand, and every element of the property industry is gaining momentum by the week.
“In relative terms, the winter months are often the quietest time of the year for the property market. But this year bridging activity has been powering ahead regardless. And now the property market is showing the first signs of the usual spring bounce – on top of all the energy that’s already in the system. So we are set for a formidable few months, and the best bridging lenders will be at the forefront, making the most of every opportunity.”
Trends in the Bridging Industry
A greater number of loans in terms of volume is the main factor behind annual growth in gross bridging lending. Loan volumes in the twelve months ending 1st March were 34% higher than in the previous twelve months.
This comes despite a seasonal fall in volumes of 16% between the final two months of 2013 and the first two months of 2014. This dip in January and February is responsible for the recent bi-monthly seasonal slowdown in gross bridging lending when measured by value.
Meanwhile, the average size of a bridging loan was largely unchanged, up 4.4% on an annual basis but down slightly by 3.3% in the last two months compared to the final two months of 2013.
This leaves the value of the average bridging loan at £444,000 over the first two months of 2014.
Duncan Kreeger continues: “Bigger deals are always exciting, and as property prices grow so will the size of loans. But the biggest factor behind the industry’s expansion is definitely the sheer volume of deals.
“That’s great for lenders and particularly good news for brokers. But it matters most to those property professionals and business people who depend on alternative finance to make their projects reality.
“The most exciting aspect of the last six months is the spare capacity for bigger loans – on top of all the latest expansion in volumes. So as confidence spreads through the economy and the property community reacts, this will be another source of significant growth for the amount of lending by value.”