Bridging market predicted to grow in 2025
The bridging sector is set for significant expansion next year, as demand for short-term property lending product continues to grow, Somo has predicted.
Following several years of economic uncertainty, falling interest rates are starting to stimulate the property market, and more home purchase activity is expected in 2025 and the years ahead.
Savills has projected that 1.14 million property transactions will take place during 2025, up from 1.05 million this year. Meanwhile, Rightmove has predicted that property prices could rise by as much as four to five per cent next year.
This resurgence in property activity will result in a need for more property financing solutions. According to Louis Alexander (pictured), chief executive of Somo, this means that bridging finance for business ventures will come to the fore.
Read more: Somo marks 10 years of zero losses to investors
“Bridge financing offers an invaluable solution for property investors and developers, providing fast, flexible funding when time is of the essence,” said Alexander.
“At Somo we have facilitated more than £350m in bridging loans, and we have seen growing demand for these financial products as the base rate has come down.
“We expect this demand to accelerate next year, and we are ready to help our existing and new borrowers access the funding they need to complete their property purchases or navigate any cash flow gaps.”
Alexander also predicted that there will be a spike in second charge lending next year, as more investors consider an alternative to first charge mortgages or personal loans.
Second charge loans allow homeowners to borrow against the equity in their properties without disrupting existing mortgage arrangements. With rising property values and an increasing number of homeowners with substantial equity in their properties, this market is becoming more appealing.
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However, Alexander cautioned that any second charge lending should be done safely and properly.
“Lenders must ensure robust risk assessments, transparent lending practices, and appropriate loan-to-value ratios to prevent over-leveraging and protect both borrowers and investors,” he said.
“As long as second charge loans are offered responsibly, they will remain an attractive investment option for investors seeking stable returns.”
Finally, Alexander predicted that 2025 will see a shifting lender landscape with less robust lenders exiting the marketplace.
Falling interest rates will make bridging finance more affordable for borrowers and could lead to more competition in the bridge financing market.
“As the market matures, we can expect weaker or less robust lenders to fall by the wayside,” added Alexander.
“The high competition and the need for financial stability and compliance will push out those who can’t maintain strong underwriting processes and risk management protocols. This consolidation of the market will ultimately lead to more stability and confidence in the sector, benefiting both borrowers and investors in the long run.”
Somo recently celebrated its 10-year anniversary as a UK bridging lender, delivering business loans to its borrower community. During this time, the platform has maintained a zero-loss record for its investors, in a testament to its strong due diligence practices.
More recently, Somo was recognised by research and ratings agency 4thWay as the peer-to-peer lending company with the best financial health in the market, and has been awarded the prestigious 4thWay +++ Excellent rating for a second year.
