This represents growth of 17.9% compared to the previous twelve months.
Recently, this growth appears to have moderated. Lending has grown at an average rate of 0.8% per month since 1st March – when industry gross lending totalled £2.02 billion.
If this latest expansion continues for a full twelve months it would represent an annualised rate of growth of 10.0%.
Duncan Kreeger continues:
“The bridging industry is still making hay – and the sun looks set to keep shining.
“Meteoric expansion in recent years is only the start of a new era. This reinvigorated industry has built a solid foundation for further growth.
“Certainly, as with all industries, such transformational progress must gradually steady. And bridging is already maturing, consolidating its enormous expansion.
“Bridging is not suffering from any of the latest challenges afflicting the mainstream mortgage market. While the high street gets the jitters as incomes struggle to keep up with house prices, the best bridging lenders are in the business of solving this problem. Our loans always aim to add value to property by actually increasing capacity in the right places. It’s a system that grows the pool of winnings, rather than just splitting the wealth of property in a different way.”
Bridging loans are growing in terms of both size and number.
The average loan size now averages £457,000 over the twelve months to 1st May.
This is 10.7% larger than the average loan in the previous twelve months (£404,000).
However the most significant growth in overall lending by value has been driven by increased volumes. In the last twelve months the volume of completed bridging loans has expanded by a third (32.4%).
This is despite a slight seasonal dip in volumes over the two months ending 1st May; with 4.1% fewer completed loans than in the previous two months.
Duncan Kreeger comments:
“Brokers want lenders who can help with any size of loan – just like they want lenders who can help in any corner of the UK or with any type of property. At West One we pride ourselves on funding an increasing number of multi-million pound deals every week.
“But as we’re seeing across the whole industry, growth is solid because it’s coming from so many different sources. Gross bridging lending is set to continue to climb for the rest of year and into 2015. Partly that will be thanks to bigger loans – and partly thanks to sheer volumes.”
Loan to value ratios across the bridging industry have reached the lowest point on record, after a prolonged and consistent drop since the end of 2013.
In the last twelve months bridging LTVs have averaged 45.3%, down from 46.9% in the twelve months to 1st May 2013.
Most recently, in just the last two months, LTVs have averaged only 41.0% – sharply down from LTVs of 45.2% in the previous two month period to 1st March.
Duncan Kreeger concludes:
“As prices pick up, we’re able to lend more cheaply against the very same property – and potentially more ambitiously.
“But LTVs are falling across the board. Bridging is now more stable than ever before – while the industry is lending record amounts. This leaves plenty of capacity for even higher gross lending later this year.
“Unlike mainstream finance, bridging lenders are not overstretching themselves in any way. Alongside our property partners we have real solutions to Britain’s lack of housing – and rising prices are only helping us to tackle this one issue at the heart of fears about the property market.”
