With the continuous development of the UK’s property and finance sectors, bridge lending is becoming a mainstream tool rather than a previous-level solution.
Once developers and high net worth individuals are preserved, these short-term funding options will gain a wider appeal among real estate investors, landlords and homeowners.
With the substantial growth in market forecasts, the future of Bridge Loans seems to be both promising and vibrant.
As the owner of a business that processes thousands of queries each year, I can see growth. Bridge loans are considered primarily to “bridge the gap between property purchase and the availability of long-term financing.” They have proven particularly useful in time-sensitive situations, such as chain breaks that require fast capital, auction purchases or real estate renovations.
These loan options are gaining wider appeal
In recent years, demand has been driven by increasingly low mainstream mortgage processing. Stricter loan standards and affordability rules make traditional routes less feasible for people suffering from complex or critical cases. By contrast, bridging provides the speed and flexibility that many borrowers now need.
Based on data on bridge trends and the association between short-term lenders, the market is about £8.5 billion per year. The analyst project will grow to £11 billion-£12 billion in 2027, which equates to a CAGR of 8%-10% over the next three years.
This growth may be based on the ongoing demand of professional investors, the awareness of individual borrowers, and the ongoing demand for the education of brokers’ benefits, which our team does every day.
Investor demand
Real estate investors and developers remain the driving force behind this market. Many people use bridge loans to acquire and renovate properties before using traditional purchase or commercial mortgage refinancing.
Bridging loans become essential in the context of allowed development rights and small-scale residential conversions.
The rise of digital platforms and peer-to-peer investment models is building bridges to broader investors
Landlords are also increasingly relying on bridge financing to maintain competitiveness. As tax liabilities rise and stricter energy efficiency regulations affecting rental stocks, short-term financing is often used to rapidly upgrade properties to meet the minimum energy performance certificate standards.
Despite the continued demand, the cost of bridging remains a key factor. When I entered this market in 2009, the title rate was 1.25% per month. Today’s interest rates are typically between 0.65% and 1.25% per month, depending on the lender, property type and loan value ratio. The mixing rate is about 0.8% per month.
As the Bank of England continues to fight inflation, the base interest rate remains rising. This environment puts pressure on lenders’ capital costs, but gradually lowering interest rates (probably by the end of 2025) may prompt a lightweight easing in lending pricing.
Bridging loans have become essential in the context of allowable development rights and small-scale residential conversions
While more expensive than mainstream mortgages, bridge loans offer the advantage of speed, with fewer obstacles to bureaucracy, and can be competitive if used correctly when you think some lenders don’t charge export fees.
We have worked with many professionals who prefer to get funding for one to three months of renovation projects to increase real estate prices, or to keep their prices by switching from bridges to “buy” to LET.
FCA review
Financial conduct authorities have developed an increasingly active interest in the bridging sector, especially with regard to consumer borrowers. Although most bridge loans are not regulated (for commercial purposes or invest in properties), more and more people fall into regulated categories, especially those related to owners occupying residences.
Lenders respond by increasing transparency and due diligence. Responsible underwriting, proven exit strategies and clearly disclosed terms are standard practices among reputable providers. This shift not only protects borrowers, but also increases confidence in the industry, which I have been supporting for years.
Bridge loans are becoming the mainstream tool instead of on general solutions
Digital conversion is accelerating throughout the field. Automated, open banking and instant property valuations are greatly reducing processing time. Some lenders provide approval within hours, enabling borrowers to act quickly in a competitive market. CRM technology providers are also investing in this area.
The rise of digital platforms and peer-to-peer investment models is building bridge financing to a wider range of investors. These platforms allow scores to participate in loans, thus providing new ways to deploy capital for short-term loan space.
As bridge finance grows in size and maturity, it is rapidly becoming the cornerstone of UK lending infrastructure.
Paul McGonigle is CEO of Active Loans
This article is in the June 2025 edition Mortgage Strategy.
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