The latest data from the Bridging & Development Lenders Association (BDLA) points to a slowdown in bridging finance activity, with applications, completions and loan book values falling by 26.3%, 15.2% and 10.6% respectively in the second quarter of 2026 compared with the previous quarter.
The general slowdown in activity across the housing market is feeding into subdued enquiry levels, while longer transaction times are making it harder for borrowers to predict when they will be able to exit their loans.
Bridging finance has always been an incredibly competitive sector, and that hasn’t changed, even with activity levels down. But what is shifting is what brokers and borrowers are looking for from their lenders, and the level of scrutiny involved in each case.
EXPERIENCE COUNTS
The buoyant nature of the bridging finance market in recent years has attracted a lot of new entrants, with lenders making increasingly ambitious promises around pricing, speed and service in order to secure business. Brokers and borrowers need confidence that lenders can deliver on their commitments, particularly when transactions become more complex or circumstances change.
Against that backdrop, we are seeing brokers place greater emphasis on lenders with an established reputation in the sector and a track record of delivering on their commitments. Those who have navigated previous downturns and built up a level of trust among brokers continue to see healthy levels of enquiries, even when the market as a whole is quieter.
It takes time to build that sort of reputation, and it is only maintained by delivering a consistent level of service on each and every deal. Competitive pricing and speed remain important, but so does the ability to deliver what has been promised, particularly when a borrower is working to a tight deadline.
WHAT COMES NEXT?
An important point raised by the BDLA was that lenders are looking more closely at the exit strategy, taking into account not just the likely sales price but also the time it may take to sell, and what alternatives are available should plans need to change.
That reflects what we are seeing in practice. We have encountered a series of refinancing cases in recent months where the original exit strategy was based on little more than hope. The initial bridging loan had been designed to tackle an immediate problem, but there hadn’t been enough thought given to what would realistically come next. In those cases, the loan hadn’t resolved the underlying issue. It had simply delayed it for a few months, potentially creating additional problems down the line.
This is where lenders and brokers alike need to focus their thinking. A credible exit strategy needs to stand up to scrutiny beyond the initial lending decision. If the borrower intends to sell, is the expected price realistic and is there sufficient time to complete the transaction? If refinancing is the plan, will the property and the borrower’s circumstances meet the requirements of a longer-term lender? These questions need to be addressed at the outset, rather than left until the loan is approaching maturity.
We need to understand what the borrower’s position is likely to look like at the end of the term, particularly if market conditions have not improved. That makes early conversations between brokers and lenders all the more important, giving brokers direct access to experienced underwriters who can work through the proposed structure, identify potential issues and establish a credible route forward before the borrower commits.
Thankfully, we are seeing those discussions take place increasingly early, with greater emphasis on what is achievable today rather than relying on the market picking up or refinancing becoming easier in the future.
FUNDING THE ENTIRE PROJECT, NOT JUST ONE STAGE
I would argue that this focus on the exit also strengthens the case for working with lenders who can consider a borrower’s wider funding requirements, rather than just the immediate need for bridging finance. For property investors, the initial acquisition, the work that follows and the eventual exit are all part of the same transaction, and they want to work with lenders who can take a similarly holistic approach.
While the need today might be a bridging loan, the plan may be to transition to a term loan in a few months’ time. Being able to discuss that need from the very beginning, with a lender that can also consider the longer-term funding requirement, makes it easier to establish whether the proposed funding journey is viable and identify any potential obstacles before the borrower commits to a particular course of action.
It also allows for contingencies to be built in, ensuring the client has options if circumstances and market conditions shift in the interim. After all, the exit from the bridging loan is not necessarily the end of the project itself.
The market may be slower than has been the norm in recent years, but it’s giving the industry an opportunity to get back to basics and be more vigilant in ensuring the structure of a loan, and the exit plan, is realistic. A bridging loan needs to do more than solve an immediate funding problem. It must leave the borrower in a position to take the next step, whether that is a sale, refinancing or progressing with the wider project. That should be the starting point for every lending decision, regardless of how busy the market happens to be.
