Gross lending in bridging finance is set to reach £800m for the first time this year, driven by a big increase in landlords seeking funding alternatives to scarce high street finance.
According to new projections provided by bridging lender West One Loans, the bridging industry has expanded rapidly o fill the gap left by traditional lenders.
The volume of loans advanced has risen 26% year on year (to the end of August) as an increasing number of residential property investors have turned to the sector to finance their projects.
In 2009, 70% of loans were granted to the residential sector. Last year, this had risen to more than three-quarters. So far in 2011, 82% of all bridging loans by volume are to residential property investors.
The average loan term now stands at just under eight months, and the average LTV now 48.4%, up from 42.5% a year ago.
Duncan Kreeger of West One said: “Having a clear exit strategy is the most important consideration when taking out bridging finance. The strong demand for accommodation means investors can be confident they can refinance easily when they are ready to rent.”
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