Mathon's research has demonstrated significant growth within the commercial bridging loan sector over the last year, with average loan size increasing by 30 per cent
The overall bridging market, estimated to be worth £2.5bn in 2006, is expected to reach £5.6bn by 2010. Using this as a benchmark, Mathon has predicted that the size of the unregulated market - approximately £1.8bn in 2006 - is likely to reach £4.2bn by 2010.
Indeed, the fact that 93 per cent of respondents said their business had grown in 2007, with more than half experiencing growth in excess of 20 per cent, supports this projected growth. The average loan size is also increasing.
The issue of regulation is coming to the fore though, with unregulated bridging accounting for 75 per cent of the business placed in 2007.
The three most popular uses of bridging are (in order of preference)
- Property and land acquisition
- Refurbishment or redevelopment and
- Purchase at undervalue.
"Sector growth has been significant with the number and value of deals steadily increasing, however it has historically been under-researched and therefore, relatively poorly understood.
"Since the recent credit crunch took hold, we have noticed that IFAs seem to be turning their attention towards commercial property opportunities and as a result we believe that this could well lead to an even greater level of dealflow in 2008 as IFAs join the "Pool of Introducers" in this specialist sector".
