Bridging Loans - UK - 2021

OVERVIEW
Key issues covered in this Report
COVID-19: Market context
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
COVID-19 and bridging loans
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
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
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
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
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
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
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
Bridging declines in 2020 due to economic shutdown but rebounds in 2021
Figure 6: UK bridging loans market value, in aggregated loan balances, 2017-21, (£ billion)
MARKET SEGMENTATION
Residential loans now dominant as commercial loans affected by current market
Figure 7: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2017-21, (£ billion)
Loan purpose
Figure 8: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2020 and 2021, (% of bridging loans)
MARKET FORECAST
Short-, medium- and long-term impact on the industry
Figure 9: Short-, medium-, and long-term impact of COVID-19 on Bridging Loans, 2020-25
Market drivers and assumptions
Figure 10: Key drivers affecting Mintel’s market forecast, 2016-25, (in % annual change, % rate, and £ million)
Learnings from the last recession
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
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
Figure 13: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2022-26, (£ billion)
THE IMPACT OF THE ECONOMY
UK economy contracts by record 9.8% in 2020 due to COVID-enforced economic shutdowns
Figure 14: Annual GDP growth rate, 2016-21*, (%)
Bank rate remains at a record low of 0.1%
Figure 15: Bank rate, 2008-20, by date of adjustment, (%)
MARKET TRENDS
Boom in residential house prices leads to demand for larger loans… 
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
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
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
Figure 18: Number of residential property transactions, 2016-17 to 2020-21, (seasonally adjusted)
Non-residential property transactions
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
Figure 20: Company insolvencies in England and Wales, 2016-20, (number)
More SMEs seeking external finance than ever before
COMPANIES AND BRANDS – KEY TAKEAWAYS
Bridging comparison site launched
Shawbrook Bank launches E-signatures
INDUSTRY STRUCTURE
Industry development
Bridging comparison site launched
Several lenders form partnerships to help expand offerings
Major industry movements
Lender overview
Figure 21: Bridging lenders’ activity and product detail, by lender, 2021/22
COMPETITIVE STRATEGIES
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
Aspen Bridging
Recent company activity
Financial information
Figure 22: Financial analysis of Aspen Bridging Limited, 2018-21, (£ 000)
Fortwell Capital
Recent company activity
Financial information
Figure 23: Financial analysis of Fortwell Capital, 2018*-20, (£ 000)
Octopus Real Estate
Recent company activity
Financial information
Figure 24: Financial analysis of Bridgeco Ltd, 2015-19, (£ 000)
Figure 25: Financial analysis of Fern Trading Ltd, 2016-20, (£ million)
Figure 26: Financial analysis of Nino Limited, 2016-20, (£ 000)
Figure 27: Financial Analysis of Octopus Co-Lend Limited, 2016*-20, (£000)
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
Figure 30: Financial analysis of Shawbrook, 2016-20, (£ million)
Together Commercial Finance
Recent company activity
Financial information
Figure 31: Financial analysis of Together Commercial Lending, 2016-20, (£ 000)
United Trust Bank
Recent company activity
Financial information
Figure 32: Financial analysis of United Trust Bank, 2016-20, (£ 000)
West One Loans
Recent company activity
Financial information
Figure 33: Financial analysis of West One Loan, 2016-20, (£ 000)
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Methodology
FURTHER SOURCES AND CONTACTS
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