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BRIDGING LOANS - UK - JULY 2018

Published By :

Mintel

Published Date : Jul 2018

Category :

Industry Profile

No. of Pages : N/A

Despite uncertain progress in Brexit negotiations, several stagnant economic growth indicators, and potential interest rate rises over the next year, the industry has performed well in a difficult environment. Whilst some lenders have left the market, others have entered and continue to adapt and cater to borrowers’ specific funding needs – something that mainstream lenders are still slow to undertake.

Table of contents
OVERVIEW
What you need to know
Covered in this Report
EXECUTIVE SUMMARY
The market
Market expected to rise by 20% in 2018
Figure 1: UK bridging loans market value, in aggregated loan balances, 2014-18, (£ billion and % annual change)
Commercial lending represents largest aspect of the market
Figure 2: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2014-18, (£ billion)
Mortgage delays represent most common use of loans
Aggregated loan balances forecast to rise by 36% to 2023
Figure 3: Forecast UK bridging loans market value, in aggregated loan balances, 2019-23, (£ billion and % annual change)
Rapid market expansion has led to negligible rise in share of total mortgage lending
Figure 4: ASTL gross mortgage lending estimates, 2014-18, (£ million and %)
Companies and brands
Low interest rate environment attracts new entrants
What we think
KEY INSIGHTS
Market oversaturation
The facts
The implications
Changes to HMO licensing could increase demand
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Bridging returns to stronger growth
Commercial lending represents largest aspect of the market
Aggregated loan balances forecast to rise by 36% to 2023
MARKET SIZE
Bridging returns to stronger growth
Figure 5: UK bridging loans market value, in aggregated loan balances, 2014-18, (£ billion and % annual change)
Most recent data for 2018 suggests growth will continue
MARKET SEGMENTATION
Commercial lending represents largest aspect of the market
Figure 6: UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2014-18, (£ billion)
Loan purpose
Figure 7: UK bridging loans market value segmentation, by loan purpose and in aggregated loan balances, 2017 and 2018, (% of bridging loans and value in £ billion)
Landlords reallocate investment from residential to commercial
MARKET FORECAST
Aggregated loan balances forecast to rise by 36% to 2023
Figure 8: Forecast UK bridging loans market value, in aggregated loan balances, 2019-23, (£ billion and % annual change)
Housebuilders and development expected to drive growth
Figure 9: Forecast UK bridging loans market value segmentation, in aggregated loan balances, by sector, 2019-23, (£ billion)
THE IMPACT OF THE ECONOMY
GDP growth slowed in 2017 with further challenges ahead
Figure 10: GDP growth rate, Q1 2014-Q1 2018, (% change on previous quarter)
MARKET TRENDS
Commercial property remains most likely route to growth whilst residential sector continues to slow
Figure 11: Halifax and nationwide house price index, by annual change per quarter, Q1 2010-Q1 2018, (%)
Rapid market expansion has only led to negligible rise in share of total mortgage lending
Figure 12: ASTL gross mortgage lending estimates, 2014-18, (£ million and %)
Other trends
Regulated and unregulated loans
Average LTVs and split between 1st and 2nd charge loans
Average interest rate
Average loan term
MARKET DRIVERS
Brexit uncertainty still affecting lending environment
Demand for property and rising refurbishments drive bridging finance
Figure 13: Number of residential property transactions, 2013-17, (number, seasonally adjusted)
Figure 14: Number of non-residential property transactions, 2013-17, (number, seasonally adjusted)
SME funding gap still providing opportunities
Figure 15: Company insolvencies in England and Wales, 2013-17, (number)
REGULATION
The EU Mortgage Credit Directive
Buy-to-let mortgages
The Small Business, Enterprise and Employment Act
Stamp duty changes
Energy Performance Certificate changes
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Low interest rate environment attracting new entrants
Smaller loans offered to target regions outside of London and the South East
INDUSTRY STRUCTURE
Industry development
Market entrants & exits
Lender overview
Figure 16: Bridging lenders’ activity and product detail, by lender, 2018
COMPETITIVE STRATEGIES
Lenders set to offer higher LTVs to meet broker demand…
...as well as lowering interest rates
Smaller loans offered to target regions outside of London and the South East
COMPANY PROFILES
Amicus Finance
Recent company activity
Financial information
Figure 17: Financial analysis of Amicus Finance, 2013-17, (£ 000)
Oaksix Holdings Limited (formerly Fortwell Capital)
Recent company activity
Financial information
Figure 18: Financial analysis of Oaksix Holdings Limited (formerly known as Fortwell Capital), 2013-17, (£ 000)
Octopus Property
Recent company activity
Financial information
Figure 19: Financial analysis of Bridgeco Ltd, 2012-16, (£000)
Figure 20: Financial analysis of Fern Trading Ltd, 2013-17, (£000)
Figure 21: Financial analysis of Octopus Property Limited (formerly Rednel), 2013-17, (£000)
Shawbrook Bank
Recent company activity
Financial information
Figure 22: Financial analysis of Shawbrook Bank, 2013-17, (£000)
Together Commercial Finance
Recent company activity
Financial information
Figure 23: Financial analysis of Together Commercial Lending, 2013-17, (£ 000)
United Trust Bank
Recent company activity
Financial information
Figure 24: Financial analysis of United Trust Bank, 2013-17, (£000)
West One Loans
Recent company activity
Financial information
Figure 25: Financial analysis of West One Loan, 2012-16, (£000)
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Methodology
FURTHER SOURCES AND CONTACTS
Trade associations
Association of Short Term Lenders
Financial Intermediary & Broker Association (FIBA)
National Association of Commercial Finance Brokers
Trade magazines
Bridging & Commercial
Business Matters
Commercial Reporter
Loans Insider
Mortgage Finance Gazette
Mortgage Introducer
Mortgage Strategy
Trade events
Financial Services Expo London 2018
NACFB Commercial Finance Expo 2019
The Finance Professional Show

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