Bridging is booming. The total market has more than tripled in size from under £3bn in 2020 to over £9bn this year, with further growth predicted in 2025.
Just over half of this year’s bridging was unregulated – the type of borrowing used by landlords and property developers to finance their property projects. Regulated bridging on residential properties has also blossomed, accounting for 44.6% of short-term property loans in Q3 2024.
Regulated bridging can help all sorts of people move on before they can sell their home, for a huge range of reasons: sellers stuck in chains, families with unusual properties progressing up the ladder, older people downsizing, career people relocating, and expats returning from abroad.
All sorts of people who mainstream mortgage brokers might encounter on any given day.
The people behind each bridging transaction
Every potential bridging customer has a different story, and for brokers, the likelihood of coming across one of these narratives has been growing thanks to prevailing market conditions. This may explain why ‘regulated bridging’ consistently features as the most popular search term in the bridging category on mortgage sourcing systems.
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We all know that market conditions have been challenging for some time. The UK property market has proved remarkably resilient, and rising house prices are testament to its underlying strength. But anyone trying to buy or sell a property in recent years knows that it has been very stop-start, with flurries of activity followed by lulls.
So, we have seen an increase in the number of people caught up in broken chains, or taking longer to sell than expected and in need of bridging finance to move to a new location, a bigger house – or a smaller home.
Changing borrower demographics also play a role. Older people looking to move closer to their family members may need to snap up a property appropriate to their needs, particularly if the new location is in higher demand than the area they are moving from.
Similarly, older people downsizing often need to move quickly, as properties such as bungalows and retirement apartments are scarce and can sell like hot cakes.
Bridging can be the best solution in these circumstances – as well as a host of other scenarios. Over the years, we have helped in a huge range of situations, including a customer who won a big house miles away in a well-known prize draw and went to live in it, but soon decided she couldn’t wait to move back to her hometown. She needed help taking swift action. Another knew it would take quite some time to sell their place because it had a full-sized, functioning windmill in the garden. They needed an extendable term.
There are as many different stories as there are bridging customers, which is why each case needs to be considered on its own merits and catered for accordingly.
Bringing empathy into the process
Happily, the cost of bridging finance has come down since we entered the market nine years ago, despite the bank base rate rising considerably in that period.
But people in need of residential bridging – and the brokers representing them – often want more than the type of keenly priced deal a competitive lender can offer. Brokers and their clients with more complex borrowing requirements often appreciate empathy, rather than a transactional approach.
Residential bridging borrowers want to have their stories listened to carefully and their needs understood.
Empathy is hard to communicate at arm’s length. That is why our underwriters ring up every bridging customer directly to chat through their situation and their needs, with the broker’s consent. Other lenders may adopt different listening strategies, but communication and understanding are key to this market.
Listening carefully and finding solutions is something brokers excel at – as lenders, we must do the same.
