Bridging lending in the UK hit new record of £10.3 billion

This is the highest figure ever recorded and marks a 14.8% rise compared to the previous year’s £8.97 billion.

The increase was driven by both a rise in new lending and a steady flow of loan repayments, which shows that borrowers are still managing to meet their short-term repayment goals.

New bridging loans totalled £7.55 billion in 2024, a 6.7% increase year-on-year. Meanwhile, repayments on existing loans also grew by 5.8% to £6.21 billion.

The average size of a new bridging loan rose to £863,000, while the average repayment size reached £804,000. These figures suggest that bridging finance is not only being used more often but also for larger property transactions. The industry’s total loan book grew by 6.2% in the final quarter of 2024 alone, reaching £6.45 billion.

What is a bridging loan?

A bridging loan is a short-term loan typically used to cover a gap between buying and selling property or to provide fast access to capital before longer-term financing can be arranged. It’s often used by property buyers who need to act quickly, such as at property auctions, or by developers and landlords needing quick funding for refurbishments or redevelopment.

What are they used for?

These loans are commonly used in situations where time is critical. Homebuyers often turn to bridging finance when they’ve found a new property but haven’t yet sold their current one.

Property investors and businesses also use them to fund renovations, purchase uninhabitable properties, or secure deals that require rapid completion. They are particularly popular in auction purchases where buyers must complete within 28 days.

Interest rates and costs

Bridging loans are more expensive than traditional mortgages. Interest is typically charged monthly and compounded. Annualised rates can range from 8% to 12% (Source: MTF) depending on the lender, borrower risk, and whether the loan is regulated or unregulated.

In addition to interest, borrowers often pay arrangement fees of around 1% to 2%, valuation fees, legal costs, and sometimes exit fees when the loan is repaid. Terms usually range from a few months up to 18 months.

Why choose bridging over mortgages or business loans?

Unlike traditional mortgages, bridging loans are much faster to arrange. In some cases, funds can be released in a matter of days.

This makes them ideal when time is of the essence. While mortgages and bank loans offer lower interest rates, they require more paperwork, longer approval times, and are not always suitable for urgent or unconventional situations. Bridging fills the gap when more flexible and immediate finance is needed.

Market size and growth

The UK bridging loan market has typically been valued at around £7 billion annually in recent years.

The jump to £10.3 billion in 2024 marks a significant shift in demand and confidence in the short-term lending market.

Experts suggest the rise reflects both the growing complexity of property transactions and the need for faster, more flexible funding in today’s market. The rise in average loan size also indicates increased use by higher-value borrowers and commercial clients.

Bridging finance is clearly becoming an increasingly important part of the UK’s lending landscape, offering fast, flexible funding at a time when traditional financing routes remain cautious and often slow to move.