Reasons to be positive about Short-Term Lending

The first two months of 2024 have certainly been more positive for the market than January and February were in 2023. The latest data shows that the short-term lending sector had a strong end to last year and so far this year, we as short-term lenders, have already read a number of positive reports about transaction levels and house prices.

According to the Association of Short-Term Lenders (ASTL), of which Alternative Bridging is a member, the final quarter of 2023 saw bridging loan books hit another record level; they rose by 4.2% to reach a new high of £7.6 billion, an increase of more than 16% on the same period the previous year.

Meanwhile, completions in the fourth quarter of 2023 were up 18.4% on the previous quarter to reach £1.69 billion.

The only slight blip was with applications, which fell slightly (by 1.1%) compared to the previous quarter, although they still totalled £9.6bn in Q4, which is a pretty healthy amount.

The year so far

Activity has been strong for Alternative Bridging in 2024. It appears that investors have stopped waiting for rates to fall to previous levels and instead of sitting on their hands have begun returning to the market. We are also currently seeing short-term lenders cutting rates in the term loan market, which helps with exit strategies for short-term loan borrowers.

On the flip side, it’s important to note that there are still challenges for short-term lenders in the market. Transaction times are continuing to increase due to ongoing conveyancing delays, but all in all, there are reasons to be positive.

At Alternative Bridging, unlike the market as a whole, short-term lending applications were up in Q4 and have improved further this year – not by a huge amount, but nevertheless showing growth at a time when others are seeing a drop in applications.

Over 30 years of property lending experience

We are short-term lenders and we’ve been in business for over 30 years. We take the approach that brokers need more than ever the right tools to deliver the best lending solutions for their property investor clients. That’s why we offer a variety of different products and in some ways ‘bridging’ isn’t a satisfactory term to describe them.

For example, our Alternative Overdraft provides a flexible drawdown facility to provide liquidity whenever a client needs it. There’s only one initial application process and nothing after that, allowing the facility to be drawn upon and repaid over and over again.

Then there is our Part X Property Finance product, a pre-consented part exchange facility designed to speed up sales and streamline chain breaks in new housing developments. Part X provides developers with the required finance to secure a part exchange deal with their property buyer. It also grants extra funds for minor refurbishments, allowing developers to improve the exchanged property, maximising its resale value.

Our most recent lending innovation

Our most recent innovation, which launched just over three months ago, was the Alternative Term Loan, which differs from all other term products in the market as it has no Early Repayment Charges (ERCs). It appeals to those borrowers who want a term loan but are uncertain about interest rates and the cost of borrowing over the next few years. We have also seen a healthy demand from investors who want a term loan – perhaps for purchasing a semi-commercial property or office building. The Alternative Term Loan provides an attractive option for this as, not only are there no ERCs, but the upfront fee is often more appealing than those charged by more traditional term lenders.

Instead of using the term ‘bridging’, we believe that we can best describe what we offer as ‘alternative lending solutions’. After all, in any field of personal and business finance, what borrowers really want is a financial solution to meet their needs and ambitions; they are not necessarily bothered if that comes in the form of bridging finance, term product, or a development exit loan. The wide variety of products that we offer – in order to provide the right tool for the job – is ultimately why we are seeing applications increase when others are witnessing the opposite.