A series of high-profile failures in the UK’s bridging loan market is raising fresh concerns among US private credit investors, as losses, alleged fraud and weak underwriting practices ripple through one of the more aggressive corners of property-backed lending, according to a report by the Financial Times.
The UK bridging sector – estimated at more than £10bn – has become increasingly reliant on capital from US private credit firms in recent years, as global alternative asset managers sought higher-yielding exposure to short-term, asset-backed mortgage lending.
Firms including Blue Owl Capital and AB CarVal have provided financing to specialist UK lenders such as TAB, while other US-based credit managers including Apollo’s Atlas platform and Castlelake have also been exposed to the sector through structured credit and lending facilities.
However, sentiment has deteriorated sharply following the collapse of multiple UK bridging lenders, including Market Financial Solutions and Century Capital, triggering losses across both private credit investors and traditional banks with exposure to the sector.
Banks including HSBC and Barclays have reported significant charges linked to financing provided to affected lending platforms, underscoring the breadth of contagion across both public and private credit markets.
The failures have raised questions over underwriting standards, collateral verification and governance in a market characterised by fast origination, broker-driven distribution and limited regulatory oversight compared with traditional mortgage lending.
Bridging loans—typically short-term, high-interest mortgages used to finance rapid property acquisitions—often fall outside standard post-financial crisis mortgage regulation. Many lenders operate without banking licences and are supervised only for compliance purposes by the Financial Conduct Authority, increasing reliance on internal risk controls and third-party valuations.
The collapse of Market Financial Solutions, which has triggered investigations and legal claims involving alleged fraud and misappropriation of funds, has been particularly damaging for sentiment. Administrators are reportedly seeking recovery of more than £1.3bn in unaccounted assets across the broader group structure.
Industry participants say the recent stress events echo earlier concerns seen in US asset-backed lending, where rapid credit expansion has at times outpaced underwriting discipline. Comparisons have been drawn to recent defaults at US corporates such as First Brands Group and Tricolor Holdings, which reignited debate over credit quality in non-bank lending markets.
US private credit firms have been key providers of liquidity to the UK bridging sector, with some also taking equity positions in specialist lenders. For example, distressed debt investor Avenue Capital Group holds a majority stake in Glenhawk and has been active in structured credit investments linked to the space.
Despite the recent turmoil, parts of the market remain operational, with established lenders continuing to raise capital through securitisations and bank facilities. However, industry professionals warn that increased scrutiny from institutional investors may lead to tighter funding conditions for smaller or less transparent operators.
Some larger bridging lenders argue that the issues are concentrated among weaker, less regulated operators rather than the core market. They point to more institutionalised platforms with consolidated governance structures and single-auditor frameworks as better positioned to withstand volatility.
Nevertheless, restructuring advisers and credit specialists caution that opacity in loan-level data, inconsistent valuation practices and fragmented funding structures remain structural risks across parts of the sector.
