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Bridging market “to reach £1bn by 2013”
The bridging market will reach £1bn of gross lending by the summer of 2013 driven by property investors and lack of funding on the high street, West One Loans has predicted.
It said that the bridging market was worth £700m in 2010 and, over the last six months, has increased 7% to around £750m of business a year.
However, the size of the bridging sector remains difficult to verify, with no official lending figures published by trade bodies or providers.
West One Loans said that demand from buy-to-let investors, the lack of alternative funding on the high street and the professionalisation of the sector would push growth in the bridging market.
Duncan Kreeger, chairman of West One Loans, said: “There is no reason why the factors at work will not continue to drive the bridging market.
“In those circumstances, the market will grow at a similar rate over the next two years. That will see us break the £1bn barrier by the summer of 2013.
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“As a specialist provider of short-term bridging finance, we are benefitting from the trend and to deal with the new business, we’ve had to ramp up our expansion and start hiring more staff. That will soon start to happen across the industry.”
However, West One Loans admits that the Association of Bridging Professionals’ (AOBP) figures show a very different size of growth in the market, with lending of £77m a quarter in June 2011, suggesting annual lending of £306m.
In addition, Richard Deacon, sales and marketing director of Masthaven, said recent figures from the Association of Short Term Lenders (ASTL) showed its members completed monthly lending of £30m.
He said: “When trying to get an accurate number for lending, it’s quite difficult. Part of the issue is that everyone classifies bridging as something different and so what is included in lenders’ figures can vary.
“I would say that £1bn a year is on the top side of lending and is overly optimistic. There will always be a need for short-term lending and a lot of people are prepared to pay for it. It is a growing market, but I don’t know how much bigger it will get.”
David Whittaker, managing director of Mortgages for Business, said: “We use bridgers very selectively when there is an inherent problem other lenders won’t touch.
“Bridging is an important niche, but, if the £1bn is reliant on buy-to-let investors as a key element, it is a very bold figure because there is a lot of buy-to-let funding out there already.”