Table of Contents
Executive Summary
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- COVID-19 and bridging loans
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- Figure 1: Expected impact of COVID-19 on Bridging Loans, short, medium, and long-term, 22 September 2020
- The market
- Aggregated loan balances forecast to rise by 40% to 2025 although slower growth expected to 2023
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- Figure 2: UK bridging loans market value, in aggregated loan balances and by sector, 2021-25, (£ billion)
- Bridging grows again but must navigate default challenge over the rest of 2020
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- Figure 3: UK bridging loans market value, in aggregated loan balances, 2016-20, (£ billion)
- Development loans now dominant as commercial sector hit by changing environment
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- Figure 4: UK bridging loans market value segmentation, in aggregated loan balances and by sector, 2016-20, (£ billion)
- Refurbishments will be the most common use of loans by the end of 2020
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- Figure 5: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2019 and 2020, (% of bridging loans)
- The consumer
- A fifth of business owners have sought finance in the last year
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- Figure 6: Last finance use, July 2020, (% of respondents)
- Grants most commonly used whilst 30% would consider bridging
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- Figure 7: Non-bank lending use, July 2020, (% of respondents)
- Lower arrangement fees remains most attractive to business
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- Figure 8: Attractive lending factors, July 2020, (% of respondents)
- Equipment purchase and improving cash flow represent most common uses of loan
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- Figure 9: Purpose of loan, July 2020, (% of respondents)
COVID-19 and Bridging Loans
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- The market
- Number of bridging lenders has reduced with a North-South divide seen in opportunities
- Changing purpose for loans as residential exceeds commercial
- Government measures
- The future
- Threats and opportunities
Issues and Insights
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- Business insolvency rise could increase level of loan defaults
- Future funding capacity under threat if repossession ban is further extended
The Market – Key Takeaways
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- Bridging grows again but must navigate defaulting challenge over the rest of 2020
- Development loans now dominant as commercial loans hit by changing environment
- Aggregated loan balances forecast to rise by 40% to 2025 although slower growth expected to 2023
Market Size
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- Bridging grows again but must navigate defaulting challenge over the rest of 2020
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- Figure 10: UK bridging loans market value, in aggregated loan balances, 2016-20, (£ billion)
- Most recent industry data suggests market has stalled but rebound expected by year end
Market Segmentation
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- Development loans now dominant as commercial loans hit by changing environment
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- Figure 11: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2016-20, (£ billion)
- Loan purpose
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- Figure 12: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2019 and 2020, (% of bridging loans)
Market Forecast
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- Short-, medium- and long-term impact on the industry
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- Figure 13: Expected impact of COVID-19 on Bridging Loans, short, medium, and long-term, 17 September 2020
- Lockdown
- Re-emergence
- Recovery
- Market drivers and assumptions
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- Figure 14: Key drivers affecting Mintel’s market forecast, 2015-2024, (in % annual change, % rate, and £ million) – (prepared on 17 September 2020)
- Learnings from the last recession
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- Figure 15: Industry performance following the last recession, 2010-2015, (£ billion)
- Aggregated loan balances forecast to rise by 40% to 2025 although slower growth expected to 2023
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- Figure 16: Forecast UK bridging loans market value, in aggregated loan balances, 2021-25, (£ billion)
- Short-term boom in property market not expected to last but bridging opportunities still expected to emerge
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- Figure 17: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2021-25, (£ billion)
The Impact of the Economy
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- Annual GDP growth falls to decade low in 2019 and is expected to significantly decline in 2020 due to large economic shutdown
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- Figure 18: Annual GDP growth rate, 2015-20*, (%)
- Bank rate set at a record low of 0.1%
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- Figure 19: Bank rate, 2008-20, by date of adjustment, (%)
Market Trends
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- Commercial property sector in a downturn whilst residential sector offers some short-term hope
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- Figure 20: Halifax and Nationwide House Price Index, by annual change per quarter, Q1 2012-Q2 2020, (%)
- Tightening mainstream mortgage lending criteria drives bridging to highest ever share of total mortgage lending
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- Figure 21: ASTL gross mortgage lending estimates, 2016-2020, (£ million and %)
- Online aggregators are becoming a growing source of funding
- 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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- Quicker property transaction completion times, Stamp Duty changes and rising house prices boost lender appeal …
- Property transaction completion times
- Stamp Duty changes
- House prices
- Residential property transactions
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- Figure 22: Number of residential property transactions, 2015-16 to 2019-20, (seasonally adjusted)
- Non-residential property transactions
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- Figure 23: Number of non-residential property transactions, 2015-16 to 2019-20, (seasonally adjusted)
- … With mortgage brokers being urged to diversify in the wake of the pandemic
- Significant increase in insolvencies expected by year end as government measures end meaning lenders must be prepared for greater default risk
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- Figure 24: Company insolvencies in England and Wales, 2015-19, (number)
Companies and Brands – Key Takeaways
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- Fintech company extends ID passporting to bridging
- Hope Capital unveils customisable bridging products
Industry Structure
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- Industry development
- Fintech company extends ID passporting to bridging
- Major industry movements
- Lender overview
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- Figure 25: Bridging lenders’ activity and product detail, by lender, 2020/21
Competitive Strategies
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- Masthaven launches online broker portal for lending
- Hope Capital unveils customisable bridging products
- Digital and remote loan application checks implemented by many lenders
Company Profiles
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- Aspen Bridging
- Recent company activity
- Financial information
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- Figure 26: Financial analysis of Aspen Bridging Limited, 2018-20, (£ 000)
- Oaksix Holdings Limited (formerly Fortwell Capital)
- Recent company activity
- Financial information
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- Figure 27: Financial analysis of Oaksix Holdings Limited (formerly Fortwell Capital), 2015-19, (£ 000)
- Octopus Real Estate (formerly Octopus Property)
- Recent company activity
- Financial information
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- Figure 28: Financial analysis of Bridgeco Ltd, 2013-17, (£ 000)
- Figure 29: Financial analysis of Fern Trading Ltd, 2015-19, (£ million)
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- Figure 30: Financial analysis of Nino Limited, 2015-19, (£ 000)
- Figure 31: Financial Analysis of Octopus Co-Lend Limited, 2016*-2019, (£000)
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- Figure 32: Financial Analysis of Octopus Healthcare Development Limited, 2015*-2019, (£000)
- Figure 33: Financial Analysis of Octopus Investments Limited, 2015-2019, (£000)
- Shawbrook Bank
- Recent company activity
- Financial information
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- Figure 34: Financial analysis of Shawbrook, 2015-19, (£ million)
- Together Commercial Finance
- Recent company activity
- Financial information
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- Figure 35: Financial analysis of Together Commercial Lending, 2015-19, (£ 000)
- United Trust Bank
- Recent company activity
- Financial information
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- Figure 36: Financial analysis of United Trust Bank, 2015-19, (£ 000)
- West One Loans
- Recent company activity
- Financial information
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- Figure 37: Financial analysis of West One Loan, 2015-19, (£ 000)
The Consumer – Key Takeaways
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- A fifth of business owners have sought finance in the last year
- Grants most commonly used whilst 30% would consider bridging
- Lower arrangement fees remain most attractive to business
- Equipment purchase and improving cash flow represent most common uses of loan
Last Finance Use
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- A fifth of business owners have sought finance in the last year
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- Figure 38: Last finance use, July 2020, (% of respondents)
Non-bank Lending Use
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- Grants most commonly used whilst 30% would consider bridging
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- Figure 39: Non-bank lending use, July 2020, (% of respondents)
Attractive Lending Factors
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- Lower arrangement fees remains most attractive to business
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- Figure 40: Attractive lending factors, July 2020, (% of respondents)
Loan Purpose
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- Equipment purchase and improving cash flow represent most common uses of loan
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- Figure 41: Purpose of loan, July 2020, (% of respondents)
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
- Loans Insider
- Mortgage Finance Gazette
- Mortgage Introducer
- Mortgage Strategy
- Trade events
- Financial Services Expo London 2020 TBC
- NACFB Commercial Finance Expo 2021
- The Finance Professional Show
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