Table of Contents
Executive Summary
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- The market
- Market expected to rise by 14% in 2019
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- Figure 1: UK bridging loans market value, in aggregated loan balances, 2015-19, (£ billion)
- Commercial retains its dominant position… just
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- Figure 2: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2015-19, (£ billion)
- Investment purposes represent most common use of loans
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- Figure 3: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2018 and 2019, (% of bridging loans)
- Aggregated loan balances forecast to rise by 44% to 2024
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- Figure 4: Forecast UK bridging loans market value, in aggregated loan balances, 2020-24, (£ billion)
- The consumer
- Grants most commonly used whilst over a quarter would consider bridging
- Lower arrangement fees most attractive to business owners
- Improving cash flow and equipment purchase represent most common uses of loan
- What we think
Issues and Insights
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- Industry under the spotlight regarding default rates
- The facts
- The implications
- The number of SMEs seeking external finance has fallen with bridgers needing to be proactive
- The facts
- The implications
The Market – What You Need to Know
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- Bridging continues to grow but is starting to feel the bite of uncertainty
- Commercial retains its dominant position… just
- Aggregated loan balances forecast to rise by 44% to 2024
Market Size
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- Bridging continues to grow but is starting to feel the bite of uncertainty
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- Figure 5: UK bridging loans market value, in aggregated loan balances, 2015-19, (£ billion)
- Most recent data for 2019 suggests industry is still growing
Market Segmentation
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- Commercial retains its dominant position… just
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- Figure 6: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2015-19, (£ billion)
- Loan purpose
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- Figure 7: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2018 and 2019, (% of bridging loans)
Market Forecast
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- Aggregated loan balances forecast to rise by 44% to 2024
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- Figure 8: Forecast UK bridging loans market value, in aggregated loan balances, 2020-24, (£ billion)
- Key indicators of growth begin to drag but industry remains optimistic
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- Figure 9: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2020-24, (£ billion)
The Impact of the Economy
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- Annual GDP growth falls to six-year low in 2018
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- Figure 10: Annual GDP growth rate, 2014-18, (%)
- Bank rate remains at 0.75%
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- Figure 11: Bank rate, 2008-18, by date of adjustment, (%)
Market Trends
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- Commercial property starts to slow but continues to offer better returns than residential sector
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- Figure 12: Halifax and nationwide House Price Index, by annual change per quarter, Q1 2011-Q2 2019, (%)
- Vast expansion in bridging has only led to small share of total mortgage lending
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- Figure 13: ASTL gross mortgage lending estimates, 2015-19, (£ million and %)
- Other trends
- Regulated and unregulated loans
- Average LTVs and split between 1st and 2nd charge loans
- Average interest rate
- Average loan term
Market Drivers
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- Brexit impasse and the increasing likelihood of a no-deal exit continues to affect lending plans
- New HMO rules provide opportunity for bridgers
- Lengthening time to complete property transactions and stagnating house prices test lenders
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- Figure 14: Number of residential property transactions, 2014-15 to 2018-19, (seasonally adjusted)
- Figure 15: Number of non-residential property transactions, 2014-15 to 2018-19, (seasonally adjusted)
- A rise in insolvencies presents challenges and reduces business from those with less access to finance
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- Figure 16: Company insolvencies in England and Wales, 2014-18, (number)
Companies and Brands – What You Need to Know
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- Hope Capital extends range to include borrowers with adverse credit
- Aspen Bridging launches ‘finish and exit’ product and flexible loan extensions
Industry Structure
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- Industry development
- Major industry movements
- Lender overview
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- Figure 17: Bridging lenders’ activity and product detail, by lender, 2019
Competitive Strategies
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- Hope Capital extends range to include borrowers with adverse credit
- Aspen Bridging launches ‘finish and exit’ product and flexible loan extensions
- UTB launches dual legal representation to simplify the legal process for loans
Company Profiles
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- Aspen Bridging
- Recent company activity
- Financial information
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- Figure 18: Financial analysis of Aspen Bridging Limited, 2018-19, (£ 000)
- Oaksix Holdings Limited (formerly Fortwell Capital)
- Recent company activity
- Financial information
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- Figure 19: Financial analysis of Oaksix Holdings Limited (formerly Fortwell Capital), 2014-18, (£ 000)
- Octopus Real Estate (formerly Octopus Property)
- Recent company activity
- Financial information
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- Figure 20: Financial analysis of Bridgeco Ltd, 2013-17, (£ 000)
- Figure 21: Financial analysis of Fern Trading Ltd, 2014-18, (£ million)
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- Figure 22: Financial analysis of Nino Limited, 2015-19, (£ 000)
- Figure 23: Financial analysis of Octopus Property Limited, 2015-19, (£ 000)
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- Figure 24: Financial analysis of Terido LLP, 2014-18, (£ 000)
- Shawbrook Bank
- Recent company activity
- Financial information
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- Figure 25: Financial analysis of Shawbrook, 2014-18, (£ million)
- Together Commercial Finance
- Recent company activity
- Financial information
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- Figure 26: Financial analysis of Together Commercial Lending, 2014-18, (£ 000)
- United Trust Bank
- Recent company activity
- Financial information
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- Figure 27: Financial analysis of United Trust Bank, 2014-18, (£ 000)
- West One Loans
- Recent company activity
- Financial information
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- Figure 28: Financial analysis of West One Loan, 2014-18, (£ 000)
The Consumer – What You Need To Know
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- Grants most commonly used whilst over a quarter would consider bridging
- Lower arrangement fees most attractive to business owners
- Improving cash flow and equipment purchase represent most common uses of loan
Non-bank Lending Use
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- Grants most commonly used whilst over a quarter would consider bridging
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- Figure 29: Non-bank lending use, June 2019, (% of respondents)
Attractive Lending Factors
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- Lower arrangement fees most attractive to business owners
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- Figure 30: Attractive lending factors, June 2019, (% of respondents)
Loan Purpose
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- Improving cash flow and equipment purchase represent most common uses of loan
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- Figure 31: Purpose of loan, June 2019, (% 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
- Trade magazines
- Trade events
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