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Bridging loan activity bounces back after Brexit dip

Posted: August 13, 2017

After the Brexit vote, there was a decrease in bridging lending activity, but a significant rise in bridging loans in the first quarter of 2017 means that lending activity is now at pre-Brexit levels, according to an August 2017 SmallBusiness.co.uk article.

April 2017 was the strongest month this year, with £4.2 billion lent by bridging lenders. Indications are that there will continue to be a rise in bridging loans during the rest of the year.

The drop in lending following the unexpected Brexit vote affected summer lending figures, but the bridging finance market quickly recovered. Many bridging lenders are smaller lenders that provide alternative finance solutions to the main high street lenders. Investors are attracted to bridging finance because loans are flexible and quick to arrange.

Since 2011, bridging finance business has increased five times and is now often the first choice of people wanting short-term loans at reasonable interest rates.

It is predicted that conventional loans may be more difficult to obtain in the future and interest rates could rise. This could mean that borrowers increasingly turn to bridging loans as their first choice of finance.

There is still plenty of activity in the property market, with both investors and individual home owners needing loans to purchase or develop property. Bridging loans can be used to help finance property deals.

The only remaining uncertainty is how the Brexit negotiations will affect the economy in the long term and how this impacts the lending sector.