Table of Contents
Executive Summary
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- Market size
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- Figure 1: UK bridging loans market value, in aggregated loan balances, 2012-16, (£ billion)
- Development loans drive market growth
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- Figure 2: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2012-16, (£ billion)
- Mortgage delays represent most common use of loan
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- Figure 3: UK bridging loans market value segmentation, by loan purpose, 2016, (% of bridging loans)
- Market trends
- Increased market competition driving a ‘rates war’
- SMEs increasingly turning to bridging to fulfil financing needs
- Lower average LTVs found later in the year
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- Figure 4: AOBP bridging market trend report, average loan-to-value, September 2013-March 2016, (%)
- Interest rates have stabilised over the last few years
- Market expansion not reflected in share of total mortgage lending
- Market factors
- Thriving property market drives growth development opportunities...
- ...with changes to planning laws offering further lending opportunities
- Insufficient SME lending by mainstream sources and eight-year low insolvency numbers of notable interest to bridging industry
- Industry structure
- Forecast
- Aggregated loan balances are forecast to increase by 69% to 2021, albeit at a somewhat stable annual rate
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- Figure 5: Forecast UK bridging loans market value, in aggregated loan balances, 2017-21, (£ billion)
- Development and second charge loans expected to drive growth
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- Figure 6: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2017-21, (£ billion)
- What we think
Key Insights
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- Will an increase in regulation help or restrict future market development?
- What can the industry do to ensure growth levels remain on the right path?
- Which areas provide the industry with further growth opportunities?
UK Economy
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- Key points
- Overview
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- Figure 7: UK GDP, 2005-15, (% quarterly growth and GDP in £ billion)
- Figure 8: UK output, by industry, 2008-16, (Index 2012 = 100)
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- Figure 9: Quarters after GDP peak, 1979, 1990 and 2008, (Number of quarters and GDP as % of pre-downturn peak)
- Inflation
- Interest rates
- House prices
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- Figure 10: UK house price changes, 2004-16, (12-month % change)
- Consumer spending
- Manufacturing
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- Figure 11: UK manufacturing, 2013-16, (Index, 2012 = 100)
- Business investment
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- Figure 12: UK GFCF 2003-15, (£ million)
- Imports
- Exports
Market Factors
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- Key points
- Market uncertainty likely to drive slowdown in growth
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- Figure 13: GDP growth rate, Q1 2012-Q1 2016, (% change on previous quarter)
- Figure 14: GDP growth rate, Q1 2013-Q1 2016, (% change on previous quarter)
- Thriving property market drives growth development opportunities...
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- Figure 15: Number of residential property transactions, 2011-15 (Number, seasonally adjusted)
- Figure 16: Number of residential property transactions, 2011-15, (number, seasonally adjusted)
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- Figure 17: Number of non-residential property transactions, 2011-15, (Number, seasonally adjusted)
- Figure 18: Number of non-residential property transactions, 2011-15, (number, seasonally adjusted)
- ...with changes to planning laws offering further lending opportunities
- Insufficient SME lending by mainstream sources and eight-year low insolvency numbers of notable interest to bridging industry
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- Figure 19: Company insolvencies in England and Wales, 2011-15, (number)
- Figure 20: Company insolvencies in England and Wales, 2011-15, (number)
- Associations have helped promote the industry’s position in the alternative finance market
- Legislation and regulation
- The EU Mortgage Credit Directive
- Buy-to-let mortgages
- The Small Business, Enterprise and Employment Act
- Stamp duty changes
Market Size
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- Key points
- Diminishing growth seen in recent times, but healthy competition could boost levels once more
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- Figure 21: UK bridging loans market value, in aggregated loan balances, 2012-16, (£ billion and % annual change)
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- Figure 22: UK bridging loans market value, in aggregated loan balances, 2012-16, (£ billion)
Market Segmentation
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- Key points
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- Figure 23: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2012-16, (£ billion)
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- Figure 24: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2012-16, (£ billion)
- Loan purpose
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- Figure 25: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2015 and 2016, (% of bridging loans and value in £ billion
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- Figure 26: UK bridging loans market value segmentation, by loan purpose, 2016, (% of bridging loans)
Market Trends
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- Key points
- Increased market competition driving a ‘rates war’
- Development finance: market competition or new opportunity?
- SMEs increasingly turning to bridging to fulfil financing needs
- Bridging making property growth its own
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- Figure 27: Halifax and Nationwide House Price Index, by annual change per quarter, Q1 2008-Q1 2016 (%)
- Figure 28: Halifax and Nationwide House Price Indices, by annual change per quarter, Q1 2008-Q1 2016, (%)
- Other industry trends
- Lower average LTVs found later in the year
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- Figure 29: AOBP Bridging Market Trend Report, by sector, average loan-to-value, September 2013-March 2016 (%)
- Figure 30: AOBP Bridging Market Trend Report, average loan-to-value, September 2013-March 2016, (%)
- Interest rates have stabilised over the last few years
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- Figure 31: AOBP Bridging Market Trend Report, average interest rate, September 2013-March 2016, (%)
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- Figure 32: AOBP Bridging Market Trend Report, average interest rate, September 2013-March 2016, (%)
- Market expansion not reflected in share of total mortgage lending
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- Figure 33: ASTL gross mortgage lending estimates, 2012-16, (£ million and %)
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- Figure 34: ASTL gross mortgage lending estimates, 2012-16, (£ million and %)
Industry Structure
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- Key points
- Industry development
- Industry emerges as other lending streams are hit by the impact of the recession...
- ... although bridging’s own funding structure also had to adapt to difficult conditions
- Borrowers now use bridging for a variety of reasons
- Scotland targeted for new lending opportunities
- Increase in regulation leading change in lending activity
- Duration and size of loans are on the rise
- New entrants could do more harm than good
- Significant movements highlight diversifying industry structure
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- Figure 35: Bridging lenders’ activity and product detail, by lender, 2016
Company Profiles
Aldermore Bank
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- Figure 36: Financial analysis of Aldermore Bank plc, 2011-15, (£ million
- Company outlook
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Alternative Bridging Corporation
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- Figure 37: Financial analysis of Alternative Bridging Corporation Limited, 2011-15, (£ 000
- Company strategy
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Amicus Finance (formerly Capital Bridging Finance)
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- Figure 38: Financial analysis of Amicus (formerly Capital Bridging Finance), 2011-15, (£ 000
- Company strategy
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Boost Capital (formerly Business Financial Services (UK))
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- Figure 39: Financial analysis of Boost Capital (formerly Business Financial Services (UK)), 2012-14, (£ 000
- Company strategy
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Commercial Acceptances
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- Figure 40: Financial analysis of Commercial Acceptances, 2011-15, (£ 000)
- Company strategy
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Dragonfly Property Finance
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- Figure 41: Financial analysis of Bridgeco Ltd, 2010-14, (£ 000)
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- Figure 42: Financial analysis of Fern Trading Ltd, 2011-15, (£ 000)
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- Figure 43: Financial analysis of Rednel, 2013-15, (£ 000)
- Company strategy
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Fortwell Capital (formerly Omni Capital Partners)
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- Figure 44: Financial analysis of Fortwell Capital, 2011-15, (£ 000)
- Company strategy
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Goldentree Financial Services
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- Figure 45: Financial analysis of Goldentree Financial Services, 2011-15, (£ 000)
- Company strategy
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Hope Capital
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- Company strategy
MT Finance
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- Company strategy
Oblix Capital
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- Company strategy
Shawbrook Bank
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- Figure 46: Financial analysis of Shawbrook, 2011-15, (£ million
- Company strategy
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Together (formerly Lancashire Mortgage Corporation)
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- Figure 47: Financial analysis of Lancashire Mortgage Corporation , 2011-15, (£ 000)
- Company strategy
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United Trust Bank
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- Figure 48: Financial analysis of United Trust Bank, 2011-15, (£ 000)
- Company strategy
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West One Loans
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- Figure 49: Financial analysis of West One Loan, 2011-15, (£ 000)
- Company strategy
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- Figure 50: Profiled companies’ combined turnover, 2011-15, (£ million)
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Forecast
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- Key points
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- Figure 51: Forecast UK bridging loans market value, in aggregated loan balances, 2017-21, (£ billion and % annual change)
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- Figure 52: Forecast UK bridging loans market value, in aggregated loan balances, 2017-21, (£ billion)
- Relaxation of permitted development and second charge loans expected to drive growth
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- Figure 53: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2017-21, (£ billion)
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- Figure 54: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2017-21, (£ billion)
- FinTech helping modernise industry output
- Lenders aiming to increase market perception by improving transparency
- SME funding gap still offering key development opportunity
Further Sources and Contacts
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- Trade associations
- Association of Bridging Professionals
- Association of Short Term Lenders
- National Association of Commercial Finance Brokers
- Trade magazines
- Bridging & Commercial
- Business Matters
- Commercial Reporter
- Loans Insider
- Mortgage Finance Gazette
- Mortgage Introducer
- Mortgage Strategy
- Trade exhibitions
- ASTL Annual Bridging Conference 2016 - Lending in an Uncertain World
- Financial Services Expo London 2016
- National Broker Conference 2016
- The Financial Professional Show
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