Table of Contents
Executive Summary
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- COVID-19 and bridging loans
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- Figure 1: Short-, medium-, and long-term impact of COVID-19 on Bridging Loans, 2020-25
- The market
- Aggregated loan balances forecast to rise by 53% to 2026 although annual growth will remain subdued
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- Figure 2: UK bridging loans market value, in aggregated loan balances and by sector, 2022-26, (£ billion)
- Bridging declines in 2020 due to economic shutdown but rebounds in 2021
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- Figure 3: UK bridging loans market value, in aggregated loan balances, 2017-21, (£ billion)
- Residential loans now dominant as commercial sector affected by current market
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- Figure 4: UK bridging loans market value segmentation, in aggregated loan balances and by sector, 2017-21, (£ billion)
- Investment purchases will be the most common use of loans by the end of 2021
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- Figure 5: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2020 and 2021, (% of bridging loans)
Issues and Insights
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- SME housebuilding boom will provide opportunities but bridging lenders must tackle the competition to reap the rewards
- Bridging remains behind others in respect of professional qualifications
The Market – Key Takeaways
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- Bridging declines in 2020 due to economic shutdown but rebounds in 2021
- Residential loans now dominant as commercial loans affected by current market
- Aggregated loan balances forecast to rise by 53% to 2026 although annual growth will remain subdued compared to previous years
Market Size
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- Bridging declines in 2020 due to economic shutdown but rebounds in 2021
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- Figure 6: UK bridging loans market value, in aggregated loan balances, 2017-21, (£ billion)
Market Segmentation
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- Residential loans now dominant as commercial loans affected by current market
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- Figure 7: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2017-21, (£ billion)
- Loan purpose
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- Figure 8: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2020 and 2021, (% of bridging loans)
Market Forecast
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- Short-, medium- and long-term impact on the industry
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- Figure 9: Short-, medium-, and long-term impact of COVID-19 on Bridging Loans, 2020-25
- Market drivers and assumptions
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- Figure 10: Key drivers affecting Mintel’s market forecast, 2016-25, (in % annual change, % rate, and £ million)
- Learnings from the last recession
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- Figure 11: Industry performance following the last recession, 2010-15, (£ billion)
- Aggregated loan balances forecast to rise by 53% to 2026 although annual growth will remain subdued in comparison to previous years
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- Figure 12: Forecast UK bridging loans market value, in aggregated loan balances, 2022-26, (£ billion)
- Development and refurb to drive growth as residential property boom ends and commercial market continues to struggle
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- Figure 13: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2022-26, (£ billion)
The Impact of the Economy
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- UK economy contracts by record 9.8% in 2020 due to COVID-enforced economic shutdowns
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- Figure 14: Annual GDP growth rate, 2016-21*, (%)
- Bank rate remains at a record low of 0.1%
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- Figure 15: Bank rate, 2008-20, by date of adjustment, (%)
Market Trends
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- Boom in residential house prices leads to demand for larger loans…
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- Figure 16: Halifax and Nationwide House Price Index, by annual change per quarter, Q1 2013 - Q2 2021, (%)
- … but delays in completion are impacting industry development
- Impact of pandemic offsets tightening mainstream mortgage lending criteria to reduce bridging’s share of total mortgage lending
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- Figure 17: ASTL gross mortgage lending estimates, 2017-21, (£ million and %)
- Other trends
- Regulated and unregulated loans
- Average LTVs and split between first and second charge loans
- Average interest rate
- Average loan term
Market Drivers
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- Last stamp duty holiday transaction surge, more positive non-residential property outlook, and rising house prices boost bridging’s appeal
- Stamp Duty changes
- House prices
- Residential property transactions
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- Figure 18: Number of residential property transactions, 2016-17 to 2020-21, (seasonally adjusted)
- Non-residential property transactions
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- Figure 19: Number of non-residential property transactions, 2016-17 to 2020-21, (seasonally adjusted)
- Potential flood of insolvencies expected by year-end as government measures end, but lenders still have attractive entry points
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- Figure 20: Company insolvencies in England and Wales, 2016-20, (number)
- More SMEs seeking external finance than ever before
Companies and Brands – Key Takeaways
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- Bridging comparison site launched
- Shawbrook Bank launches E-signatures
Industry Structure
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- Industry development
- Bridging comparison site launched
- Several lenders form partnerships to help expand offerings
- Major industry movements
- Lender overview
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- Figure 21: Bridging lenders’ activity and product detail, by lender, 2021/22
Competitive Strategies
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- First 4 Bridging teams up with Roma Finance to offer semi-exclusive loan
- Shawbrook Bank launches E-Signatures
- Fortwell Capital increases its lending capacity
- Together partners with Legal & General to offer short-term finance through its digital platform
Company Profiles
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- Aspen Bridging
- Recent company activity
- Financial information
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- Figure 22: Financial analysis of Aspen Bridging Limited, 2018-21, (£ 000)
- Fortwell Capital
- Recent company activity
- Financial information
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- Figure 23: Financial analysis of Fortwell Capital, 2018*-20, (£ 000)
- Octopus Real Estate
- Recent company activity
- Financial information
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- Figure 24: Financial analysis of Bridgeco Ltd, 2015-19, (£ 000)
- Figure 25: Financial analysis of Fern Trading Ltd, 2016-20, (£ million)
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- Figure 26: Financial analysis of Nino Limited, 2016-20, (£ 000)
- Figure 27: Financial Analysis of Octopus Co-Lend Limited, 2016*-20, (£000)
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- Figure 28: Financial Analysis of Octopus Healthcare Development Limited, 2016-20, (£000)
- Figure 29: Financial Analysis of Octopus Investments Limited, 2016-20, (£000)
- Shawbrook Bank
- Recent company activity
- Financial information
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- Figure 30: Financial analysis of Shawbrook, 2016-20, (£ million)
- Together Commercial Finance
- Recent company activity
- Financial information
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- Figure 31: Financial analysis of Together Commercial Lending, 2016-20, (£ 000)
- United Trust Bank
- Recent company activity
- Financial information
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- Figure 32: Financial analysis of United Trust Bank, 2016-20, (£ 000)
- West One Loans
- Recent company activity
- Financial information
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- Figure 33: Financial analysis of West One Loan, 2016-20, (£ 000)
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
Further Sources and Contacts
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- Trade associations
- Association of Short Term Lenders
- Financial Intermediary & Broker Association (FIBA)
- National Association of Commercial Finance Brokers
- Trade magazines
- Bridging & Commercial
- Business Matters
- Commercial Reporter
- Mortgage Finance Gazette
- Mortgage Introducer
- Mortgage Strategy
- Trade events
- Broker Expo
- NACFB Commercial Finance Expo 2021
- National Landlord Investment Show (London)
- National Landlord Investment Show (Manchester)
- The Finance Professional Show
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