MortgagesAug 23 2013

Bridging loans set to reach £2bn by end of year

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The UK bridging loan industry will have supplied more than £2bn in short-term secured finance by the end of 2013, the most recent West One Bridging Index suggests.

According to the index, industry gross bridging was £492m in the second quarter. In the twelve months to June, gross bridging lending was £1.76bn.

Annual lending has grown by 9 per cent since the first quarter, and has grown 39 per cent since the second quarter of 2012.

At the average rate of the last 12 months, industry gross lending will total £2.1bn in 2013.

Duncan Kreeger, director at West One Loans, said: “Our £2bn prediction for this year was labeled out of date when mortgage lending recovered slightly. Now it looks like an underestimate. That’s because of the different culture in the bridging industry – we’re not afraid of the projects that deserve real investment.”

The size of the average bridging loan was £405,000 in the second quarter, compared to £397,000 three months earlier. This represents quarterly growth of 2 per cent, leaving loans in Q2 10.1 per cent larger than in the same three months of 2012.

Mr Kreeger said: “The worst of the financial crisis could be over, but the long-term implications are only just becoming clear. SMEs are still largely ignored by high street lenders, despite having solid collateral and reliable business plans.

“Part of filling that gap is providing more loans, and part is lending larger, ambitious amounts when required.”

Learn more with FTAdviser’s Guide to Bridging Loans, which also includes 60 CPD minutes.