Two years of economic turbulence have forced the UK public and its business community to rethink its priorities. Not to mention, the lending options available when looking to secure cost-effective funding for a wide variety of projects.
Interestingly, one area of the UK’s lending market that has flourished throughout the pandemic is the bridging finance sector. Bridging loans specialists and lenders collectively enjoyed an extremely robust 2021, and the same is now predicted for the year ahead in 2022.
According to the latest figures from West One, the lender’s bridging division saw its most prosperous year on record in 2021. Gross bridging loan completions were up a full 32% (reaching £485 million) during the first six months of last year, increasing further to an impressive 52% by November.
All of which could pave the way for further record-breaking performance in 2022, so states the lender.
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Housing Sector Remains a Key Driver
The UK’s housing market remains a hive of activity, as property prices continue to skyrocket and mortgage rates remain close to record lows. In addition, new and established developers across the country are setting their sights on increasingly ambitious property conversions, transforming commercial and semi-commercial properties into homes.
Experts believe that demand for larger bridging loans – sums in excess of £1 million – will grow considerably over the course of the next 12 months.
Others have cited growing demand for affordable finance for property renovations as improvements as a key driver for the bridging sector. With more people spending more time at home than ever before, more money is being spent on making our homes pleasant and functional places to reside, and this is where bridging finance has proved ever popular as a funding option.
The materials and labour shortages that blighted the sector in 2021 are showing signs of improvement. This could subsequently lead to a major spike in property development and renovation activity, as it becomes increasingly affordable to plan and complete ambitious projects.
House Prices Set to Soften
While there may be no signs of the UK housing bubble bursting in the near future, the gradual softening of house prices is inevitable at some stage. Something that could motivate more buy-to-let landlords to expand or diversify their investment portfolios, as the property investment cost becomes less prohibitive.
This is also a sector where bridging finance has proved particularly popular over recent years. Bridging finance enables new and established landlords to purchase properties at auction for less than their true market values, conduct the necessary improvements and let them out to generate profits.
Or perhaps, sell the properties on to generate significant short-term revenues.
In all instances, the bridging sector will continue to cater to those looking for fast-access finance at competitive rates. In particular, borrowers with adverse credit or a history of financial issues are likely to find the bridging loan sector far more flexible and accommodating than the traditional High Street approach.
BY LINDSEY BENSON
Source: News Anyway
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