Most bridging loan lenders supply bridging loans for a variety of purposes, but some financial experts have predicted that many lenders will specialise in a particular area in the future.
A December 2016 MortgageSolutions.co.uk article discusses that the majority of bridging lending is for property, but bridging loans can also be used for raising business capital for non-property purposes.
The bridging loan business is very competitive amongst existing lenders, as well as new financial organisations entering the market. Other lending platforms such as peer-to-peer and crowdfunding lending are also competing against traditional bridging finance solutions.
Competition is beneficial to the borrower as it tends to drive interest rates and fees down. There have also been regulatory changes that make operating and administrating bridging lending more costly. This could lead to consolidation in the bridging sector, as well as some companies specialising in areas that they feel that they can more effectively compete in.
This is similar to what happened to the mortgage market in the ‘90s when some lenders specialised in a particular types of mortgages. If bridging lenders followed this strategy, then they could specialise in niche areas such as property type, location, loan value or risk type.
If bridging lenders do start specialising, then this should not adversely affect borrowers who use a broker, as brokers should always be able to match the best bridging loan deal to their clients’ requirements. It may make the broker’s job more difficult, but that will be transparent to the borrower.