The bridging loan industry reported a record figure of £2bn in gross lending during 2013, an increase of 27% on the £1.57 billion in gross bridging lending in 2012. In the two month period of November – December 2013 industry gross bridging lending was £419m, a 5.5% rise from the £397m recorded over the previous two months.
Commenting on the data, Duncan Kreeger, director at West One Loans, said: “Economic progress feels more solid by the week, and it’s branching out across every area of business. By securing vital projects against property, firms and individuals stand to make the most from a year of great opportunity.
“Bridging has grown up from the industry it once was, and it’s still evolving in 2014. Lenders are expanding and opening their doors to different types of borrower. An economy on the move needs rapid finance that can really get projects started – and short-term secured lending is moving to fill that gap.”
On an annual basis, loans in 2013 were higher than in 2012, in line with the long term trend, with loans averaging £430,000, a 5.2% increase above the average loan in 2012.
On an annual basis loan to value (LTV) ratios are still lower than previous highs with the average LTV across all twelve months of 2013 at 46.4% - down from 48.0% in 2012. LTV ratios increased by 0.9% to an average of 48.1% in the final two months of 2013 over the previous two month period.
Kreeger said: “Just a few years ago the average bridging loan was worth half what it is now. Since then, the biggest transformation has been a growing interest from bigger property developers, with professional investors and small businesses looking for more significant funds.
“There is certainly space to lend at higher loan ratios this year, and the industry definitely has capacity to fund bigger loans where needed. Just as business and investment opportunities are opening up, the property market is putting the pedal to the floor. Alongside rates that look set to stay low for some time, slightly higher LTV’s could mean more projects will have access to the finance they deserve.”
