Gross bridging lending topped the £2bn mark in the twelve months to March, according to recent figures, which represents an increase of 26% compared to the previous 12 months.
At Aldermore, bridging was the next logical step in our evolution and expansion as a bank and as a mortgage lender. It means we now offer a complete proposition for both brokers and direct customers, whether that is short term finance or a five-year fixed rate Help to Buy mortgage, right through to complex buy-to-let mortgages and development finance for housebuilders.
While there have been many issues in the bridging market historically, it is in a much better place these days, primarily due to regulatory developments and market demand.
As one of the few fully licensed banks to go into the bridging market, I would hope that we will add further credibility to the sector. It is a very effective product that has a definite place in the current market.
Short-term loans are favoured by investors who are often constrained by time-limits that require a quick turnaround, such as those who have purchased property at auction. Bridging loans can help a wide variety of those seeking finance, whether it’s for a special purchase, cash-flow assistance, or to fund a tax or VAT charge.
While a bridging loan isn’t the right choice for every customer, the rise in uptake demonstrates a willingness and success of both lenders and intermediaries advising their clients of the best possible financing for their situation, and while the sector is unlikely to overtake the more traditional lending platforms, the recent lending figures have definitely caused others in the industry to sit up and take notice.
The rise in activity for alternative lending methods such as bridging loans or peer-to-peer demonstrate a willingness from both lenders and customers to try different approaches, and a market driven by innovation and more tailored lending can only be a good sign of things to come.
We are always looking to add products that meet the market’s needs, and as the bridging market is over £2bn right now and is expected to grow over the next 12 months, we are excited by the potential it offers.
