In this blog piece, Leanne Ardron, Director of Bridging finance at LendInvest highlights the myth and realities when it comes to the state of the Bridging market in the UK

Bridging finance has long been a vital tool in the property sector, providing short-term funding solutions that enable investors and developers to move quickly on opportunities.

Yet despite its growing popularity, it remains a complex market where asking the right questions is key to securing the best deal.

Myths persist, and recent shifts in the market – including some lenders altering their incentive, fee and rate structures to prioritise short-term ‘wins’ over long-term sustainability – have prompted important discussions about best practices and borrower outcomes.

The Changing Face of Bridging Finance

The post-financial crisis era saw bridging finance dominated by non-bank lenders, alternative credit funds, and specialist institutions. However, in recent years, challenger banks and even larger financial players have entered the space, bringing a new competitive dynamic. The presence of these institutions – often with access to lower-cost capital but burdened with legacy systems – has influenced the way bridging loans are structured and priced.

And it’s not hard to see why they are attracted to this sector.

The latest figures from the Bridging & Development Lenders Association (BDLA) underscore the sector’s rapid expansion. As of February 2025, annual UK bridging loan books surpassed £10 billion for the first time, with Q3 2024 completions reaching £1.79 billion, a 2.6% increase from the previous quarter. This sustained growth highlights the increasing demand for short-term property finance solutions and the ongoing evolution of the sector.

Increased Competition and Market Pressures

As competition intensifies, lenders are taking different approaches to attract business. Some banks have reduced pricing aggressively, resulting in situations where bridging loans are now cheaper than buy-to-let loans, a shift that would have been unthinkable five years ago. 

Competition is good – we’re not here to say otherwise. But there are just increasing hints of some unscrupulous lending practices emerging – which if the market isn’t careful, could lead to systemic issues that impact long-term sustainability. The proverbial race to the bottom doesn’t benefit anyone. So, in an attempt to help, we figured we’d try to unpick some of the key issues a little:

Key Myths and Misconceptions About Bridging Finance

All Bridging Lenders Are the Same

Not all lenders take the same approach to risk, service or deal structuring. Some operate purely as transactional lenders, while other take a relationship-driven approach, balancing speed with a rigorous underwriting process that protects both borrowers and investors.

Lowest Rate = Best Deal

An ultra-low rate may seem attractive, but it rarely tells the full story. Some lenders use low rates as a headline grabber while recouping costs through hidden fees and restrictive terms. Borrowers should be looking at total borrowing costs, repayment terms, and the lender’s ability to support their project throughout the term of both the loan and, often, the project – such as how easily a borrower could transition to a different financing product, like Buy-to-let or development finance, if needed.

Bridging Is Just About Speed

While speed is a core advantage of bridging finance, it should never come at the expense of due diligence. Responsible lenders ensure that fast decision-making is underpinned by a strong risk management framework. The best lenders combine efficiency with robust underwriting, leveraging technology to speed up processes while maintaining human oversight for complex cases or higher-risk profiles.

Brokers Always Get the Best Deal for Borrowers

Most brokers work diligently to secure the best outcomes for their clients, but in a small number of cases, there are lender creating unintended influences. Borrowers should understand how deals are structured to ensure their needs remain the priority. The best brokers prioritise the borrower’s financial success over short-term gains.

What’s Driving Growth in the Bridging Market?

Several factors have contributed to the significant expansion of the Bridging finance sector:

• Increased Wholesale Funding: More capital is available at every point in the capital structure than at any time post-crisis. This influx of institutional investment is fuelling sector growth.
• Changing Borrower Needs” Interest rate volatility has driven demand for short-term solutions, as investors seek agile financing options while navigating economic uncertainty.
• Government and Retrofit Incentives: Increased government focus on housing supply and energy-efficient refurbishments has led to greater demand for development and bridging finance solutions.
• Reputation & Relationships: A track record of delivering for borrowers and investors alike.

Key Questions Borrowers Should be Asking

Before committing to a bridging loan, borrowers should be asking themselves:

• What due diligence does the lender carry out to protect both parties?
• How is affordability assessed, and what exit strategies are considered?
• What happens if the project timeline extends or unexpected costs arise?
• How flexible are the lender’s terms in case circumstances change?
• How does the lender structure fees, and who benefits? What incentives are being given to onboard me, and to whom?

Final Thoughts: Is the Market Storing Up Issues for the Future?

Bridging finance has evolved from a niche funding solution into a mainstream product, offering borrowers unparalleled flexibility. However, as competition intensifies and capital floods the market, the sector faces a defining moment.

The rapid expansion seen in the last few years has created opportunities – but also risks. 

Lenders, borrowers, and brokers alike must focus on sustainability rather than just short-term gains. The question remains: will current market dynamics lead to long-term stability, or are we witnessing unsustainable practices that could come under pressure in the years ahead?

Borrowers who align with responsible lenders and take the time to assess their financing options carefully will be best placed to navigate this evolving landscape. Equally, lenders must take a long-term approach – this sector is critical to supporting the growth and viability of the UK housing market. Undermining it now just to secure deal flow, at the expense of sustainable funding practices, is not in anyone’s interests.

This is a hugely valuable market for both borrowers and lenders alike, and it is essential that it is properly protected for the long term.