Do High Street Banks do Bridging Loans and Why Is So Hard to Find Clear Information?

There’s a reason why bridging finance is a specialist market. You may have approached your high street bank of choice – be it Barclays, Natwest or Halifax – for short term support in the past, only to end up hitting a brick wall.

We all know how complicated the property investment world is. Sometimes, things go wrong, or plans have to change. A bit of flexibility during times like these would go a long way.

But, trying to find adaptable solutions or funding with mainstream lenders can be a challenge. Especially during uncertain economic periods. Why is this so?

In this blog, we’ll explore why high street banks and lenders are reluctant to embrace, or even offer specialist financial products.

Banks may offer bridging products, but they’ll be hard to find

High street banks have been known to offer bridging loans in the past, and some still do. The likes of HSBC, Lloyds, and Santander offer specialist products at the moment, according to bridging loan directory. But trying to find information on these loans could prove tricky.

Many of these lenders appear hesitant to promote what they offer. If you were to scour their websites, you’ll likely find endless details on ISAs, mortgages, and business accounts. But trying to find information on any bridging products may prove futile.

To get any basic details, let alone make a claim, you’ll likely need to go through a broker. Existing customers of these banks may be able to make a direct request, but they’ll likely have to jump through some hoops to do so.

So why is it so hard to find mainstream bridging finance? While the answer is multi-faceted, risk likely plays the biggest part here. Bridging products, for lenders, can be risky. They’re short-term nature can make century old banks nervous.

There’s also a lot of external variables that can affect how successful a bridging loan is. As they’re used for property investment, they’re swayed by chains in the buying process, market sentiment, buyers pulling out, and many other factors. Bridging is dependent on multiple elements coming together – in a relatively short space of time.

Mainstream lenders may have the motivation and resources available to stomach this risk during good times. But when an economy suffers, it makes sense to roll back on riskier products, or lending entirely. We’ve seen how quickly these shifts can happen in the past.

In 2007, at the start of the credit crunch, total gross mortgage lending in the UK reached just over £370bn. In 2009, this plummeted to £147bn. We only started to reach pre-08 mortgage lending levels again last year.

Also, while mortgage lending consistently rose in the years after the financial crisis, there was one single year that saw another big plunge. Between 2019 and 2020, the total value dropped by around £26bn as the global pandemic wreaked havoc.

We’re seeing similar results now. Mortgage deals have been pulled from the market in recent months, due to interest rate uncertainty and a cost-of-living crisis. Also, where mortgages can be found, the criteria involved is likely to be very strict.

But where banks struggle, specialist lenders can step up to support the market.