Jason Berry, Jason Berry, group sales director at Crystal Specialist Finance

Bridging is evolving, and knowledge is power




As the bridging market evolves and changes, Jason Berry, group sales director at Crystal Specialist Finance, highlights some of these transformations and that in this market, knowledge is power.

Diverse and important lessons about the future of the UK’s bridging finance market can be gleaned from what’s evolved within our sector recently.

What’s more, this evolution is happening at a rate that has rarely been witnessed previously.

Regulatory changes, evolving market dynamics and borrower segmentation - among other “trends - are all now key considerations and the last few months have shone the clearest spotlight yet on their impact.

This period has seen a blend of challenges and opportunities, which are resolutely shaping the way borrowers, lenders and intermediaries approach short-term financing solutions.

Let’s appraise a few of these trends to assess their potential impact on the future of bridging finance in the UK.

Regulatory changes

Regulatory developments are – without doubt – currently shaping the landscape of bridging finance in the UK.

Recent regulatory changes, including updates to lending criteria and risk assessment standards, have resolutely influenced the lending practices of bridging finance providers.

Lenders are now placing greater emphasis on responsible lending practices, conducting thorough due diligence and ensuring compliance with regulatory requirements to mitigate risks and protect borrowers' interests.

In addition to regulatory compliance, risk management has emerged as a key focus area for both lenders and borrowers in the bridging finance market.

With heightened market volatility and economic uncertainty, lenders are adopting more conservative lending strategies and risk mitigation measures.

From stress testing loan portfolios to implementing robust credit assessment frameworks, lenders are now rightly taking proactive steps to safeguard themselves against potential risks and uncertainties.

Evolving market dynamics

Flexibility – in the truest sense of this word – has also now come to underpin the bridging finance market.

Borrowers are increasingly seeking the most flexible financing options that cater for specific needs and circumstances as economic uncertainties and market volatilities endure.

Lenders have responded by offering loan terms which are truly customisable.

These, in turn, are enabling borrowers to tailor repayment schedules, interest rates and loan structures to align with their short-term objectives.


Moreover, technology continues to drive innovation in the bridging finance sector.

Digital platforms and innovations within fintech have streamlined the application and approval process, ensuring that borrowers now have even faster access to funds.

This is something that they have rightly come to expect.

Separately, the importance placed on sustainability and environmental, social and governance (ESG) considerations in bridging finance is constantly mounting.

As environmental awareness and social responsibility take centre stage, borrowers and lenders increasingly incorporate ESG criteria into their financing decisions.

This trend is also clearly here to stay.

Borrower segmentation

Different types of borrowers – including property developers, investors as well as homeowners – all have distinct financing needs and risk profiles.

And market segmentation is becoming increasingly pronounced in the bridging finance sector.

Lenders are tailoring their products and services to cater to the individual requirements of these different borrowers by offering specialised bridging finance solutions tailored to meet these specific market niches.

But despite the challenges posed by economic uncertainties and regulatory changes, I believe the outlook for bridging finance in the UK remains positive.

Through innovation, flexibility and a real commitment to responsible lending practices, the market continues to evolve and adapt to these changing dynamics.

Communication remains key

I have witnessed these significant trends and developments in the bridging finance market most clearly since October 2023 [since the implementation of the Financial Services and Markets Act and Consumer Duty implementation], which reflects the evolving needs and priorities of borrowers, lenders, and regulators.

These trends are reshaping both perceptions of bridging finance as well as the way lenders operate – and they have innovation, flexibility, sustainability and risk management at their core.

New opportunities will undoubtedly present themselves - alongside challenges - throughout 2024 and beyond.

As borrowers, lenders and intermediaries navigate this evolving landscape, knowledge as well as collaboration and communication remain key.

These, in my opinion, remain the best way to unlock the full potential of bridging finance as a vital component of the UK's financial ecosystem.

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