UK gross bridging lending is expected to surpass £2.7 billion over the course of next year, according to a survey of over 250 financial intermediaries.
This represents annual growth of 33%, bringing the industry to a new record high, according to the latest West One Broker Sentiment Survey.
Such growth will bring gross bridging lending to over £2.7 billion over the course of 2014, after gross lending of £1.93 billion in the 12 months to 1st November.
Lending in 2014 will be more than three times greater than total lending in 2011, when gross bridging lending totalled £0.91 billion.
Duncan Kreeger, director at West One Loans, said: “Bridging loans provide crucial support for credit-worthy borrowers and great ideas. In a warming economic climate, that support is vital for growth.
“Bridging has grown up over the course of the recession – just as most mainstream lenders have wandered into troubled waters. Now that the economy is picking up, all forms of alternative finance are steaming ahead – and bridging in particular is making the most of the competitive advantage won in the dark days of recession.
“Looking at the figures so far this year, brokers’ expectations are looking pretty spot on. And 2014 looks particularly exciting given how accurate the same predictions from intermediaries were a year ago.”
Brokers expect loan to value ratios in the bridging industry to rise in 2014. The net proportion of those expecting higher LTVs, minus those expecting lower LTVs, has hit a record high – with a net 38% expecting higher loan to value bridging loans. The latest West One Bridging Index shows average LTV currently stand at 42.8%.
Kreeger added: “Higher LTVs will allow bridging lenders to lend on more ambitious projects. Bridging loan sizes have already doubled on average since 2010 – but most recently LTVs have been falling as property has risen in value. That has left plenty of capacity for larger loans, which will be realised over the next 12 months.
“This expectation confirms that loans will keep growing next year, making more use of increasingly valuable security.
“Larger loans are particularly great news for the biggest deals in both the property and small business markets, which rely on rapid access to considerable finance.”
