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Bridge Loans – Moving away from purchase financing to Soft-Bridge

Published by Michael Rose, 01.03.2023

Hyrock, as the market leader in mortgage-backed bridge loans, has observed significant shifts in both demand and supply in recent months. These include increased demand from construction lenders, an increasing mix between bridge and mezzanine financing, and the emergence of a new market of longer-term “soft bridge” products on moderately leveraged properties with long-term, low-cost fixed-rate mortgages.

In 2020, 80% of bridge loans were related to the purchase or sale of a property. Investors wanted to seize short-term opportunities or a sale was delayed, resulting in a need for liquidity.

“Furthermore, the demand for bridge loans is signifi­cantly greater than the supply.”

The share of this customer group has decreased significantly and accounted for less than one third of all transactions in the course of 2022. The proportion of real estate investors pursuing aggressive growth strategies has decreased - but completely new demand groups have emerged, causing overall demand for bridge financing to further increase.

Today, mezzanine and bridge financing largely operate in tandem and can hardly be differentiated.

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