Do banks offer bridging loans?
Find out whether HSBC, Santander, Lloyds, Standard Chartered, NatWest or Barclays still offer bridging loans.
Sourcing fast, short-term bridging finance from the major UK banks isn't easy - but is it impossible? Find out if HSBC, Santander, Lloyds Banking Group, Standard Chartered, NatWest Group or Barclays plc still offer bridging loans, and what your other options are to raise the bridging loan you require.
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Almost all major UK Banks do not offer commercial bridging loans
Most major banks do not offer traditional commercial bridging loans of a high-risk nature and now only offer alternative loans that adhere to strict eligibility criteria.
A few high street banks still offer bridging loans to enable existing customers who want to buy a house before selling theirs, which was the original purpose of bridging finance.
Non-status lending, bad credit, high LTVs and urgent bridging loans cannot be found on the high street and of the 8 major UK banks, only one offers a bridging loan product.
What are the 8 major UK Banks?
The UK banking sector comprises several private UK banks, international banks, and building societies. A few large banks dominate the sector, competing for market position.
There are currently 344 banks and 52 building societies in the UK.
The biggest eight banks in the UK in 2024 and whether they offer bridging loans:
- HSBC Holdings PLC.
- Santander UK Group Holdings PLC.
- Lloyds Banking Group PLC:
- Lloyds Bank offers bridging loans via their private banking specialist lending division.
- Halifax
- Bank of Scotland
- Scottish Widows.
- Standard Chartered PLC.
- NatWest Group PLC.
- Barclays PLC.
Why don't high street Banks offer bridging loans?
Bridging loans bridge the gap between a long-term loan and a short-term need for capital. Banks in the UK have traditionally offered bridging loans, but in recent years, bridging loans have become a product more associated with specialist lenders.
Banks in the UK mostly do not offer bridging loans anymore because they are seen as too risky.
Since the credit crunch of 2008 and the ensuing Great Recession, the government significantly regulated lending criteria for high-risk loans, such as bridging finance, which stopped high-street banks from being allowed to make high-risk loans. Banks cut much of their business lending by £90bn in the following ten years.
As the Bank of England comments, "In 2008, an unsafe financial system caused financial crisis and economic disaster. Global production plummeted, the number of people who lost their jobs soared, and governments worldwide used taxpayers’ money to save banks from failure to prevent a global depression. Since the crisis, the Bank of England has built a safer system bolstered by two important institutional innovations. First, it has been responsible for supervising individual banks and building societies. Second is the creation of an authority in the Bank with new powers – the Financial Policy Committee – tasked by Parliament to monitor risks in the financial system that could cause problems for the wider economy."
The rise of the specialist bridging loan lender
As the lending criteria became more stringent, fewer bridging loans were available in the UK. The lack of availability from banks gave rise to several specialist lenders entering the market in 2008. While the history of bridging loans can be traced back much further than 2008, the credit crunch and the ensuing house price crash created ideal market conditions for commercial bridging loan opportunities such as property development finance.
These new lenders began offering bridging loan facilities for a variety of reasons, including purchasing residential and commercial property, funding development projects, debt consolidation and financing auction property purchases. More importantly, this new group of lenders was comfortable with high-risk, high-reward, short-term lending scenarios. Non-status and bad credit lending were acceptable, as was securing large-value finance on residential property.
Are bridging loan interest rates higher than Banks?
Historically, specialist bridging lenders offer higher rates than bank loans due to the increased risks associated with these types of loans. Still, they are also significantly more flexible regarding their lending criteria and borrower eligibility.
14 Successive Bank of England base rate hikes from December 2021 to a 15-year high of 5.25% in August 2023 caused challenges in the mortgage markets, leading to many interest-rate increases and mortgage products being pulled.
Borrowing costs generally have increased sharply in the past 12 months, making bridging loans less expensive compared to the high street banks' headline rates for another borrowing.
Average interest rates in the UK as of 08 June 2023
| Loan Type | APR |
| Credit Cards | 20.69% |
| Home Mortgages (5-Year fixed) | 5.59% |
| Home Mortgages (Standard Rate Variable) | 7.99% |
| Home Mortgages (2-Year Standard Variable) | 5.14% |
| BTL Mortgages | 5.18% |
| Bridging Loans (Loans below £1,000,000 | 12.00% |
| Bridging Loans (Loans over £1,000,000 | 5.28% |
While all loans currently carry a typical interest rate of more than 5%, there are also often large arrangement fees and other charges to consider, which will add to the overall cost of the loan.
