Careful now! Six fiery trends in bridging finance


fiery bridging trends

If these trends were a noise, they would be the crackling sizzle of a roaring fire. Or the smoky hiss as water splashes a burning frying pan.

These six unstoppable movements are blazing through the bridging industry with force. They’re not just heated, they’re white hot.

Get your oven mitts ready, and protect your eyelashes from singeing …

Here’s our six smoking predictions for 2023:

1.   Mortgage Armageddon means soaring demand for bridging

Increasing interest rates are playing havoc with the mortgage market. Some borrowers – like those at Northern Rock – are even taking matters into their own hands and suing providers over the new charges. But one industry’s pain could be another’s gain.

As the year sets off to a wobbly start for banks, bridging lenders will roar ahead. “Bridging is a great tool for times of uncertainty”, explains Guy Harrington, Founder & CEO of Glenhawk. “And when banks are retrenching their lending like they are now, it’s prime time for our sector”.

One director from Black & White Bridging agrees. “The demand for bridging finance will be strong in 2023 and we have seen evidence of this already in the first two weeks of the year”, he adds.

“As we saw [last] year, mainstream lenders struggled to adapt to a changing landscape, and this could continue into 2023”, adds Tiba Raja, Executive Director of Market Financial Solutions (MFS). “Where property investors struggle to get anywhere on the high street, specialist lenders will be there to keep investment plans afloat!”

Buckle in bridging lenders, demand could be about to rocket.


2.   Property prices will dwindle, but not plummet

The shuddering mortgage market will probably lead to a drop in property prices, but it won’t be disastrous. “We’re likely to see property prices cool in the opening months of 2023”, reveals MFS’ Raja. “But this will likely be counteracted by rising demand elsewhere in the market”.

The price tags of properties won’t go underwater, according to Raja, as “prime central London property should keep the market buoyant, while rising rental prices could entice buy-to-let investors”. These factors will offer a much-appreciated life-raft to the market.

Rather than a dip and wobble, Glenhawk’s Harrington believes what’s happening is simply a correction. “I can see housing stock rolling off by 10-12% however we need to remember we are coming off record highs from Covid,” he comments. “Quite frankly, the housing market was way too hot and needed a cooling period”.


3.   More people will want a slice of the bridging action

Once such a niche corner of the lendosphere, bridging loans are steadily swaggering into mainstream. One study found that bridging lending surged by almost 50% since the Bank of England raised the base rate in 2021.

“It is becoming clear with each year that goes by, there are an increased number of brokers and their clients turning to bridging loans”, confides Jonathan Sealey, CEO at Hope Capital.

Get your John Travolta dance moves prepped, because bridging is about to be centre of the party.

So, what will pump-up this demand in 2023? According to Sealey, property-hopefuls will want to “grab opportunities and beat the competition in the property market”.

“Some landlords will want to expand their portfolios with developers continuing to look for sites where they can bring old stock back in to use or develop out new ones”, adds Black & White Bridging’s director.

Meanwhile, the uncertainty of mortgage products will continue to edge potential clients closer to alternatives. Whatever the motivation, so many people want a slice… we may need a bigger cake.


4.   Auctions will go higher… higher… higher…

Are borrowers getting hooked on buying their homes under the hammer? Hope Capital’s Sealey suspects so! “A trend which will no doubt continue to grow in 2023 is bridging loans which facilitate properties being purchased at auction”, he confides. “Buying property at auction is a very attractive prospect for many property investors – from the fast bidding to the final fall of the hammer, this method of buying has a lot of appeal”.

Over the past year, the popularity of auctions has edged up, with Auction House UK reporting a 10% increase in sales. For 2023, as the cost of living grips and mortgage products falter, the auction houses are getting hotter and hotter by the minute.

Sealey confirms that bridging is the “natural choice” for this type of property purchase. “The borrower is required to complete the purchase within a 28-day time frame”, he explains. “[…] Long-term financing option, such as a mortgage, often does not do the trick”. Auctions and bridging lenders are a match made in heaven!

bridging loan for auction purchase

Discover more: Auction Finance Bridging Loans – A Guide

5.   It’s now or never for genuinely green initiatives 

This prediction is literally hot. Ice-cap meltingly so. With the planet warming by a concerning 0.89 degrees above the baseline, carbon intensive industries like finance and construction seriously need to pull their fingers out in 2023.

One bridging firm tackling this head-on is Impact Capital. Head of Credit Wes Friedel is one of the people driving others to do more. “As an industry we can and ought to evolve, strengthening our focus on key issues such as the construction industry accounting for 36% of worldwide energy use and 40% of CO2 emissions”, he explains.

As regulators and the public come down hard on greenwashing, calling a bridging product “sustainable” for trivial reasons like energy efficiency ratings will no longer be tolerated. “There are only a couple of us lenders offering genuine products that are ‘green’ or focus on sustainability. Not only does the focus need to shift, but it needs to become a bigger priority”, Wes adds.

Come on Lenders! The planet needs you!

carbon emissions

Explore: Stop talking about going green and start underwriting new technology

6.   Digital innovation will shake up the property market

Gahh… “Digital Innovation”. It feels like such a vintage term. But the truth is, there is still a lot to be done within bridging and the wider property market. This year, we could expect to see some futuristic firms grab hold of the industry and shake it like a polaroid picture.

Leading the way are mobile apps like OnLadder and Sprive. They’re harnessing the power of open banking to bring seamless lending products to customers. CEO of Sprive Jinesh Vohra comments, “Lenders are looking to leverage open banking where possible to offer increasingly automated, digital journey to satisfy the demands of brokers and customers”.

According to Vohra, these digital innovations will help boutique and niche firms stand out from the crowd. “As Open Banking becomes more popular it provides opportunities for smaller lenders who can’t compete on price to differentiate their service using tech and data”, he reveals.

Another cyber-phenomenon that’s taking the lending world by storm is the rise of crypto-backed bridging loans. Despite a rocky 2022, crypto ownership is set to double this year.

One bridging lender who’s keen to snatch-up a slice of the action is Platinum Global Bridging Finance. “We certainly saw a significant rise in crypto loans in 2022 mainly because more of the public are becoming more educated as time progresses on and the longer crypto has been around”, comments Specialist Lending Advisor, Ged Ward. “We can expect to see the market open up a lot more significantly as the price of crypto is expected to rise again”, he reveals.

Whether or not you’re a fan of apps, embedded finance and crypto, they are becoming scorching relevant. This is definitely one for bridging lenders to consider as they map out their long-term strategies.


Check out: Crypto-backed loans: A $50 billion opportunity in bridging finance

Burn baby burn…

The heat is on! If you’ve got this far with zero blisters and your eyebrows intact, you may just be one of the pioneers surfing these lava-hot trends.

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