A record £831m of bridging loans was transacted by lenders in 2023, according to the latest Bridging Trends figures.

This was a 16% increase on 2022 which saw £716.2m in bridging loans completed.

Bridging Trends is a quarterly publication developed by short-term finance lender, MT Finance, to offer a general snapshot of the bridging finance sector.

The figures combine bridging loan completions from several specialist finance packagers operating within the UK bridging market, which include AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Finance and UK Property Finance. The data for top broker criteria searches is supplied by Knowledge Bank.

Last year had started strongly with contributors completing £278.8m of bridging loans in the first quarter of 2023, the highest level of loans transacted in a single quarter. MT Finance suggested this was likely due to borrowers turning to bridging finance amid uncertainty in the mainstream mortgage market after 2022's mini-Budget.

By Q2, momentum cooled with £165.7m of loans transacted by contributors although volumes rebounded and remained consistent throughout the second half of the year, with an increase to £191m in Q3 and £195.5m in Q4.

Managing Director at MT Finance, Gareth Lewis, commented: “It is encouraging to see that bridging finance’s popularity is growing and that an increasing number of borrowers are unlocking its speed and flexibility. Brokers have clearly worked hard to educate their clients and that has certainly paid off.

“As a sense of stability returns to the mainstream mortgage market, my hope is that borrowers continue to utilise bridging’s versatility for everything from unlocking equity to funding an auction purchase and we move further away from the perception that it is solely a last resort option.”

The Bridging Trends data also indicated that 2023 saw borrowers primarily utilise the speed and flexibility of the bridging product to save their onward property purchases – as preventing a chain break was the most popular reason for obtaining bridging finance, accounting for 22% of all loans.

This surpassed the previous year's most popular purpose of investment purchase, which accounted for 20% of loans and decreased from 23% in 2022.

Regulated bridging also continued to extend its market share in 2023, increasing to 46.3% from 44% in 2022 and 40.8% in 2021. This was likely influenced by rising interest rates and product withdrawals from mortgage lenders, particularly in the first half of the year.

“It's no surprise to see an overall increase in bridging volumes in 2023 and it reflects what we have seen, especially the increased use of regulated bridging,” commented managing director at Impact Specialist Finance, Dale Jannels.

“As a business that’s been operating in bridging for decades, we recognise and understand the products' complexities and have seen almost every kind of customer scenario. This helps identify potential issues before they arise and helps brokers and their customers use regulated bridging sensibly and with eyes wide open.”

Director at Capital B Property Finance, Andre Bartlett, added: “It's noteworthy how borrowers utilised the speed and flexibility of bridging loans to prevent chain breaks, especially amid market uncertainties.

“Additionally, the rise in regulated bridging suggests a shift in borrower preferences influenced by evolving market dynamics, including rising interest rates and product withdrawals from traditional mortgage lenders.”

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