Commercial bridging

Commercial bridging market ripe for new entrants

As the residential bridging market becomes increasingly competitive, lenders have displayed new interest in commercial bridging, with current commercial lenders predicting more entrants.

Zorin Finance announced in July that it was looking into launching commercial bridging loans.

During the same month, InterBay Commercial also announced it had launched residential and commercial bridging finance with rates starting at 0.44% per month.

Commenting on the market, Ludo Mackenzie, head of commercial at Octopus Property, said: “Over the last five years, we have seen a number of new lenders enter the commercial space and it would be naïve to think that this trend won’t continue.

“At the same time, we have also seen some lenders withdraw, either through choice or through a lack of success. 

“We can also expect to see more investor interest in commercial property as traditional buy-to-let investors diversify away from residential property as a result of tax changes and higher trading costs.”

Arbuthnot Latham has seen opportunity arise in the commercial space now that the residential bridging market has become saturated.

Stephen Fletcher, managing director of commercial banking at Arbuthnot Latham, said: “The market has certainly become more competitive, particularly in the residential bridging market place, due to the number of providers competing for business. 

“The commercial space is not quite as crowded, so opportunities may well exist for new entrants.

“Additional players in the residential marketplace have certainly made providers more competitive, so this may well filter into the commercial marketplace.

“But providers will need to be conscious that there are additional risks and that pricing needs to reflect such risks, otherwise their business models will not be sustainable long term.”

The Association of Short Term Lenders (ASTL) recently saw the value of bridging loans written by its members surpass £3bn for the first time.

Benson Hersch, CEO of the ASTL, said: “There is significant and ongoing demand for commercial bridging finance, so we would expect more providers to enter into the market over the coming months and years.

“The rising number of challenger banks may well be a major source of this, as they look to provide alternative services to the established players.

“Most bridging providers are actually already in the commercial space, so the number of residential-only companies making the move will be limited.

“New providers will have to quickly get up to the standards of well-established firms, who have the knowledge and track record to attract customers.”

Jon Salisbury, managing director at Ortus Secured Finance, also predicted more entrants into the commercial market.

“The bridging market has long been a crowded space, so we would expect some lenders to launch commercial finance products as they seek to expand their offering. 

“This will give brokers and borrowers more choice and should therefore be welcomed.”

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