Lenders more upbeat as loans grow in value and duration
Expectations for growth in the bridging finance market have risen, with lenders and brokers more optimistic about origination volumes and institutional funding, according to the latest Interpath and BDLA UK Bridging Market Survey.
Now in its second year, the survey collected responses from more than 50 lenders representing an estimated £12 billion in annual loan volumes, covering approximately £17 billion in property transactions based on typical loan-to-value (LTV) ratios. The research, conducted in partnership with The Bridging & Development Lenders Association (BDLA), highlights both growth prospects and emerging risks within the market amid falling interest rates and growing borrower demand.
According to the data, 75% of respondents expect market origination volumes to rise over the next 12 months, up from 62% in last year’s survey. A further 61% said they anticipate increased institutional funding, reflecting the market’s continued momentum. However, 63% also expect stronger competition among lenders — a significant jump from 47% in 2024.
Interest rates were widely seen as a key growth driver. Some 61% of respondents noted a fall in average monthly rates over the past year, and 76% foresee further reductions ahead. While most participants (71%) expect LTV ratios to remain stable, concerns around credit quality are growing — 20% forecast deterioration in borrower creditworthiness, compared to 11% last year.
The bridging market report also found a shift in loan characteristics. Most respondents (59%) indicated average monthly rates now range between 0.75% and 1.00%, a drop from the 1.00% to 1.25% range cited in 2024. Average loan sizes are increasing, with 51% of lenders reporting loans over £600,000, up from 34% last year. Loan terms are also extending: 43% of participants now cite average durations of 12 to 15 months, compared to 33% in the previous survey.
Despite the optimism, lenders remain wary of challenges ahead. Competition was cited by 51% as the top business risk for the year ahead. Other concerns included slowing property sales (14%) and falling asset values (12%). On a broader scale, 39% flagged macroeconomic uncertainty as the leading risk for the market.
“The bridging finance market is breaking into the mainstream,” said Stuart Mogg (pictured left), managing director and head of financial services debt and capital advisory at Interpath. “Steadily decreasing rates and intense competition are making products more accessible, and there is an incredibly strong consensus that these conditions will continue over the next twelve months... it will be important that there isn’t a race to the bottom and providers maintain strong underwriting and credit quality standards.”
“The findings of this year’s survey confirm what many of us in the industry have been experiencing first-hand – bridging finance is becoming an increasingly mainstream solution for borrowers,” added Vic Jannels (pictured right), chief executive of the Bridging & Development Lenders Association. “It’s vital that lenders maintain robust underwriting practices and uphold transparency, particularly as competition intensifies and the demand for larger, longer-term loans grows.”
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