How big is the bridging market?
The lending data at the Association of Short Term Lenders (ASTL) — the only trade body dedicated to representing the interests of lenders in the short-term property lending market — is considered to be the industry standard.
At the end of 2021, our data showed a record period for bridging lending in the last quarter (Q4), with completions and applications both reaching an all-time high.
Help us to better represent the sector
The figures, which are compiled and analysed by independent auditors using data provided by ASTL members, show that bridging applications reached £12.7bn in Q4 2021 — an increase of 65.4% on the previous quarter, which itself was a record period at the time.
The value of completions in Q4 rose by 19% from Q3 to a new record of £1.2bn. This led to another increase in the value of loan books, which reached £5.08bn at the end of December, representing a small rise from the previous quarter’s total of £5.07bn.
Small operations
However, official data puts bridging loan books at just over £5.07bn. The problem is our data does not include figures from every lender that is active in the bridging market. We include most of the recognisable names.
At the last count, we had 41 lender members.
In identifying yourself you will help us to get a clearer idea of the size of the bridging market
The popular view is that, in bridging, there are probably up to 50 lenders that would be deemed recognisable names. Most are members, but there remain notable exceptions that would account for significant amounts of business.
We are working hard to get them on board but, even if we succeed and every recognisable brand that is active in the bridging market becomes a member of the ASTL, it’s highly unlikely we will be able to provide a definitive number for the size of the market.
This is because, on top of the 50 recognisable brands, there are 200 to 400 so-called invisible lenders. These are small operations, where individuals or families have a large sum of money and choose to earn a return on their cash by deploying it in the form of bridging loans.
The ability for smaller lenders to operate in our market is one of the forces behind change and innovation
A lot of these lenders focus on a local area, maybe working with one or two customers and completing one or two loans a year. But there are hundreds of them.
And, because lenders operating on this scale tend to be active only in the unregulated market, we have no record of how many there are, who they are and how much business they are collectively writing.
Transparency
I am not suggesting that small-scale bridging lenders are a bad thing. The ability for smaller lenders to operate in our market is one of the forces behind change and innovation. However, as the sector grows it must continue to mature and be ever more professional; not least because it will attract greater attention from the regulator. It will be expected to be more transparent.
At the ASTL, we have set the tone for this transparency with our member rules and code of conduct.
However, if the industry’s trade association cannot give a definitive size for the market, we have some way to go.
On top of the 50 recognisable brands, there are 200 to 400 so-called invisible lenders. These are small operations
I will end with a call to action. If you are a small, ‘invisible’ lender that operates in the bridging space, please get in touch with the ASTL and let us know.
You do not have to join our great association, although we would love it if you did. But in identifying yourself you will help us to get a clearer idea of the size of the bridging market, in terms of both number of lenders and volume of business.
This will help us to better represent the sector in our ongoing dialogue with regulators, policymakers and the media.
Vic Jannels is chief executive of the ASTL
This article featured in the May edition of MS.
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