Gross bridging lending in 2013 totalled £2.0 billion, up 3.3% from the annual figure in November 2013, West One Loans has reported.
This means the annual growth in gross bridging lending was 27%, up from £1.57 billion in gross bridging lending in 2012.
In the two month period from 1 November to 1 January 2014, industry gross bridging lending was £419 million, up 5.5% from £397 million in the previous two months.
At that run rate, gross lending in the next twelve months would be £2.51 billion per year.
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.”
Industry loan volumes during the two months ending 1 January increased by 10.8% compared to the previous two month period. This brings loan volumes for the whole of 2013 to levels 33% higher than the preceding 12 months.
Meanwhile, the average loan is now worth £459,000, representing a slight drop of 1.4% from the two months ending 1st November.
On an annual basis, loans in 2013 were larger than the previous 12 months, in line with the long term trend. For the last 12 months as a whole, loans averaged £430,000, or 5.2% more than the average loan in 2012.
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, professional investors and small businesses looking for more significant funds.
“The last few months have seen growth focused on volumes as enquiries are coming in thick and fast. But the long-term trend in terms of loan sizes is also moving upwards. Multi-million pound deals aren’t uncommon anymore, and as 2014 unfolds, even the most ambitious ideas are becoming ever more possible.”
Meanwhile, loan-to-value ratios across the bridging industry have risen by almost one percentage point in recent months. In the two months to 1st January the average LTV was 48.1%, or 0.9 percentage points higher than LTVs of 47.2% in the previous two month period to 1 November.
On an annual basis loan to value ratios are still lower than previous highs. The average LTV across all twelve months of 2013 was 46.4% – down from 48.0% in 2012.
Kreeger added: “Proper underwriting and a ‘safety first’ approach have always been cornerstones of the best bridging lenders. Higher LTVs are completely consistent with that principle, but as properties grow in value more gearing is not always necessary.
“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 LTVs could mean more projects will have access to the finance they deserve.”
