Bridging loans forecast to hit £12 billion in 2025
Bridging loans are booming as borrowers seek speed, flexibility and short-term funding.
Bridging lending saw record levels of growth in 2024, with data from the Bridging & Lending Developers Association (BDLA) showing that bridging completions hit a new record high of £2.30 billion during the final quarter of last year. The sector continues to boom, following a Q4 performance that saw the total loan book exceed £10 billion for the first time, with this figure forecast to hit £12.2 billion in 2025.
This marked a 28.6 per cent increase on the previous quarter alone, pushing total completions to £7.34 billion for the year – up from £5.76 billion in 2023. Based on historic market trend data, West One Loans forecasts that this figure could hit £9.46 billion in 2025.
As a result, the size of overall loan books exceeded £10 billion for the first time (£10.3 billion), with West One Loans also forecasting that this figure could top £12.2 billion by the end of the year. So what are the benefits of bridging? West One Loans has looked at the top seven reasons behind the current bridging sector boom.
Speed and opportunity
The most important factor is speed, with bridging loans taking an average of 38 days to arrange in Q4 2024. This provides an ideal solution for those who need to make quick decisions in order to take advantage of the opportunities on offer in the current market – for example, purchasing uninhabitable properties that a traditional lender may not finance.
Flexible lending criteria and multiple uses
Bridging lenders put a greater focus on asset value and exit strategy rather than credit history, and are not bound by the same laborious application and approval processes of conventional lenders.
Bridging lending can also be used for multiple reasons, such as business needs, tax liabilities, debt consolidation or refurbishment.
Short-term solutions
Bridging finance is ideal for covering financial gaps and is ideal for scenarios where funding is needed for a purchase or renovation before an existing property can be sold.
Higher LTV ratios
Some bridging lenders offer up to 75 per cent loan-to-value, making it a far easier path to obtain significant funding.
Customisable terms
As with the flexible lending criteria, borrowers are able to negotiate terms to suit their individual needs, from custom interest payments to the repayment schedule itself. Again, this provides the flexibility that many borrowers require when it comes to traversing what has become an increasingly difficult landscape.
Multiple users
Bridging is accessible to a wide range of borrowers, from homeowners and property developers to landlords and business owners. This accessibility and the ability to tailor a bridging loan to the individual needs of the borrower is a driving factor behind the current boom.
Exit strategies can reduce risk
Finally, a well-planned exit strategy can make bridging a safe and effective solution, whether it's refinancing or selling a property.
'We've seen an incredible level of growth across the bridging sector over the past year, and this really highlights the vital role the sector plays within the UK property market, particularly as the landscape has become increasingly more turbulent and interest rates have climbed,' says Co-Head of Short-Term Finance at West One Loans, Thomas Cantor. 'It's fair to say that bridging has very much become a mainstream product and a vital tool in a developer's armoury.
'This is down to the many benefits the sector offers, not least the speed and flexibility a bridging loan can offer when securing short-term finance, as well as the fact that there are no early repayment penalties.
'It's these benefits that are enabling everyone, from property developers to landlords and homeowners to business owners, to progress with their plans without the restrictions that come via a more conventional lender – and we only anticipate that this current trend will intensify over the coming year.'
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