More bridging capacity, but a higher bar for exit planning

Bridging Loan Directory’s latest round-up presents a financing market moving in two directions. Lenders are adding capacity, extending criteria and completing varied transactions. At the same time, subdued house price growth, lower mortgage approvals and questions around longer-term borrowing costs are increasing the importance of disciplined exit planning.

More capacity does not remove execution risk

Pallas Capital’s £200m funding line for UK bridging and development finance is a significant statement of lending capacity. Allica Bank has also increased its residential bridging automated valuation model limit to £2m at up to 75% LTV, while Redwood Bank has entered buy-to-let bridging. Afin Bank’s expansion into regulated bridging provides another sign of lender appetite.

For borrowers, broader criteria and additional products should create more structuring options. However, headline liquidity is not the same as certainty of completion. Lenders will still distinguish between transactions through the quality of the asset, borrower experience, legal readiness and credibility of the proposed exit. Increased competition may therefore benefit well-prepared cases more than marginal ones.

The exit is becoming the central underwriting question

Bridging Loan Directory reported that mortgage approvals for house purchases fell to 56,100 in July, while Nationwide described house price growth as subdued in August. Brokers also reported more chain-breaking enquiries alongside longer sales periods. These conditions can create demand for short-term finance, but they may also make a sale-led exit less predictable.

The publication separately examined whether rising gilt yields and higher longer-term borrowing costs could put pressure on borrowers intending to refinance bridging loans onto term facilities. This is an important distinction. A refinance exit depends not only on the completed asset and expected valuation, but also on the availability and affordability of the intended long-term debt when the bridge matures.

Investors should consequently consider the primary exit, its timing and credible alternatives at the outset. A transaction that relies on a rapid sale or a narrowly defined refinance route may attract closer scrutiny than one supported by realistic timing assumptions and a clearly evidenced contingency plan.

Development finance remains active, with planning certainty in focus

The £15.6m facility for 92 supported-living units in South West London and the £11.7m facility for a 79-home County Durham development show continued appetite for substantial residential and specialist schemes. These transactions indicate that lenders remain prepared to support delivery where the project, sponsor and structure meet their requirements.

Proposed standard Section 106 templates could also matter for funding certainty. Greater consistency may help lenders assess obligations and timing more efficiently, although Bridging Loan Directory noted concerns around the proposed cascade timetable. For developers, the practical issue is whether standardisation reduces ambiguity without introducing new timing risks. Until that becomes clearer, Section 106 assumptions should remain visible within funding programmes rather than being treated as a procedural detail.

Specialist finance is serving a wider set of business plans

Recent completions included a £7.6m bridge against industrial assets during rent reviews, £1.12m for the acquisition and refurbishment of a Grade II-listed hotel, and £1.1m for a food hall. A $30.75m cross-border bridge and a £967,000 second-charge overdraft for future acquisitions further illustrate the range of structures being used.

• Developers should align facility structure with planning, conversion and delivery milestones.

• Investors should test sale and refinance exits against potentially longer transaction periods.

• Borrowers should present complete information early, particularly where assets or ownership structures are complex.

The overall signal is constructive but selective. Capital is available across bridging and development finance, yet weaker transaction indicators and refinancing uncertainty raise the standard of preparation. The strongest financing cases are likely to be those that combine a clear use of funds with evidence-based timing and more than one credible route to repayment.