Will bridging lenders expand into the United States?
Many British bridging finance lenders want to expand their business. The EY 2018 UK Bridging Market Study has revealed that one area that bridging lenders are considering expanding into is the United States.
Many bridging lenders are expected to grow their UK business in 2018. Competition between lenders is fierce and this has kept interest rates low, but there is a limit to how far bridging finance lenders can expand in the UK. Many are looking to the US for new business, since the financial market is huge and demand for bridging loans is high.
One of the attractions of the US market is that existing bridging loan products could be easily adapted to it, as conditions are similar to the UK. The short-term lending market is not as crowded in the US as it is in Britain. However, the small number of large bridging lenders in the US could oppose any new entrants into the country’s bridging market. Any new entrants would need to have a large financial backing to compete in the US.
Another issue in the US is that different states have different regulations about recovering loans, especially when borrowers go into arrears. In California, it is much easier to foreclose on property to recover debts than it is in New York and Florida.
There have been UK bridging finance lenders that operated in the US, with varying degrees of success. While others may try, a max exodus to the US is not expected by UK bridging lenders.