Total amount of loans increased by 17.6% year on year
Nearly £5 billion was lent through bridging loan completions in 2022, representing a 17.6% annual increase, latest market analysis by bridging finance specialist Apex Bridging has shown.
Apex Bridging analysed bridging market trends based on data from the Association of Short Term Lenders, looking at how homebuyer reliance on bridging has grown since 2019, as well as forecasting how the bridging sector will fare over the next few years.
The figures show that a total of £4.94 billion was lent via bridging loans in 2022, reflecting a significant increase when compared to the £4.2 billion in bridging loans completed in 2021. This also sits 24% higher than the pre-pandemic market in 2019 when £3.99 billion was lent through bridging loans.
Additional analysis of Bridging Trends data by Apex Bridging showed that investment purchases were the primary reason for bridging market activity, accounting for 23% of all loans issued.
Chain breaks also accounted for a sizeable sum of lending, stated as the reason behind 20% of all bridging loans. Heavy refurbishment (13%), unregulated finance (11%), and business purposes (9%) also featured within the top five reasons behind bridging loan market activity in 2022.
Based on current trends, Apex Bridging predicted that bridging market activity will increase over the coming years, climbing by 2.4% this year, with total lending expected to hit £5.59 billion annually by 2025.
“With the exception of the market dip seen in 2020 due to initial pandemic market restrictions, the bridging sector has gone from strength to strength in recent years,” Chris Hodgkinson (pictured), managing director at Apex Bridging, said. “We’re now seeing considerably more lent via bridging loans on an annual basis, even when compared to the pre-pandemic market in 2019.
“There’s a common misconception that bridging is really only utilised in times of crisis in order to save a transaction from collapse, and while this is certainly the case to some extent, it’s far from the only reason that many buyers and investors utilise bridging loans.
“The sector is utilised by a range of buyers and investors for a myriad of reasons and as the traditional mortgage lending space becomes increasingly more difficult, not to mention expensive, we expect to see the reliance on bridging loans continue to increase over the next few years.”
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