The bridging sector is undergoing a period of continuous, unprecedented growth, enhancing it as a key component of the financial financing environment.
According to the latest loan data from BDLA, Bridge loan books grew by more than 14% to £10.3 billion in the fourth quarter of 2024 (Q4) (Q4). During this period, the completion deadline reached a record £2.3 billion and the application reached £11.3 billion.
Many of these apps will be converted to quarter 1 2025 completions, but not all. In fact, this is a feature of the bridge market, where typically only more than one-third of applications continue to convert to complete.
Promoting a more efficient market will benefit everyone
This difference usually stems from the nature of the market, where brokers approach multiple lenders simultaneously to assess interest and ensure optimal terms. Although this approach makes sense in a rapidly growing industry, it inevitably leads to high drop rates as many applications have never been followed.
Lenders understand it as bridging the inherent aspects of the financial sector, but are inefficient. Underwriting teams often find themselves working on applications that will never improve, resulting in unnecessary workloads and sometimes frustration.
Accuracy of details
Improving market efficiency is an achievable goal and brokers play a crucial role in helping lenders work more effectively. One way to do this is to ensure that the information submitted in the initial query is as accurate and comprehensive as possible.
Our interaction with the FCA tells us that regulators are increasingly looking at the provision of all loans
By conducting detailed inquiries at the beginning, including any other considerations and the details of the case, brokers can reduce the number of follow-up questions required and help lenders make decisions faster.
This approach not only speeds up the application process, but also increases the possibility of ensuring the correct terms for the client.
So, what steps can brokers take to help lenders work more effectively?
Even during the query phase, it is important to include accurate details about the customer, security and ownership structure. Of course, this is true of any type of mortgage inquiry. The main difference in bridging is the details of a well-defined exit strategy.
Lenders place great emphasis on exit strategies, so ensuring that this aspect is clear and feasible is crucial to increase approval opportunities. It may even be advantageous to propose multiple exit strategies, with the specific choice depending on the possibility of other scenarios.
This is an evolving situation, but it serves as a good reminder of the importance of a strong trade body
For example, if a customer’s primary exit strategy is to sell property, what are their options if the sale fails to complete the redemption bridge loan in time? Do they have plans that cannot be achieved?
Transparent communication
It is crucial to maintain transparent and positive communication with clients and lenders throughout the process. If there are potential challenges or complexities, solving these problems from the beginning can enable lenders to provide tailored solutions instead of unexpected problems later on.
The growth of bridge finance has brought huge opportunities for brokers, lenders and borrowers. It can also bring challenges, so promoting a more efficient and collaborative market will benefit everyone.
Improving market efficiency is an achievable goal
By increasing the accuracy of inquiries and submissions, brokers can reduce the unnecessary workload of lenders, resulting in a more simplified, effective and customer-centric industry.
At BDLA, we are committed to supporting initiatives that encourage best practices and facilitate public discussion between brokers and lenders.
Public discussion
Another area where we have open discussions with policy makers and regulators. While many lenders in our space operate entirely in unregulated loans, our interactions with financial conduct authorities tell us that regulators are increasingly browsing the offer of all loans.
A recent example is that in the Court of Appeal’s judgment, a decision against an undisclosed committee, which disclosed the committee paying to intermediaries.
Underwriting teams often find themselves engaged in applications that will never improve.
The point of this judgment is that it is based on legal legislation rather than regulation, so it is possible to have a reading for all lenders in our department (whether regulated or unregulated).
This is an evolving situation, but it serves as a good reminder of the importance of a strong trade body. At BDLA, our membership is as large as ever. This membership enhances our voice in dialogue with regulators and in promoting dialogue in the industry.
VIC Jannels is CEO of Bridge & Development Lenders Association
This article is in the April 2025 version Mortgage Strategy.
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