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State of the Private Lending Industry: Reflecting on 2023 with an Eye Toward 2024

Lightning Docs, the official loan documents and loan document platform of the American Association of Private Lenders (AAPL), recently shared updated annual bridge and rental loan data that shows the current state of the private lending industry.

Since 2018, Lightning Docs has tracked data for more than 54,000 loans at an aggregate of $29.7 billion, using information generated from users of its platform. During an average month, Lighting Docs sees about 200 users, more than 2,000 loans, and more than $1 billion in loan volume. In February, Lightning Docs released annual date for 2023, breaking down interest rates and loan volume for both bridge and rental loans.

The updated annual data confirms that 2023 did not turn out to be as bad a year for the private lending industry as some forecasters were initially concerned it would be. Overall, after a rough January and February, most markers of the industry arced up in March and then remained at a plateau for the remainder of the year.


For our purposes, we are defining a bridge loan as an interest-only, short-term loan of 36 months or less that can be used for fix-and-flip projects, construction, including ground-up, or as a short-term financing mechanism with no construction (i.e., a true bridge). When we tracked the same pool of 123 users who used the system from Jan. 1, 2023, the data showed loan volume increased by 25% from January 2023 to January 2024 (see Table 1). Viewed from March 2023 to December 2023, volume was down by 8%, reflecting the plateau effect we saw across the board with seasonality decreasing from December through February annually.



The  national average for interest rates for bridge loans last year stayed within 11%, starting at 11.08% and reaching a low of 10.97% before steadily cresting upward to 11.48% by December. Average transaction sizes stayed mostly flat throughout the year, ultimately increasing slightly, starting at $407,801 and then dipping to a year-low of $401,402 before gradually climbing to a high of $462,753 at the end of the year (see Table 2). To ensure meaningful results, we excluded outlier interest rates below 4% or above 15% and any loan amounts over $2 million or less than $50,000.

Behind the national average is a broad range of actual interest rates. Our data shows that 38% of loans actually went for an 11% to 11.99% interest rate while 35% were at a 12%-12.99% rate. At the other end of the spectrum, a 10th of loans were at 10-10.99% (see Table 3).

Between 2022 and 2023, California, Florida, and Texas remained the top three states in terms of loan volume (see Table 4). Massachusetts dropped lower, while New Jersey moved into the top 10, which is surprising because of the state's onerous foreclosure process and meaningfully lower average interest rates.

Given that bridge loans are intensely local business, we also take a look at loans at the county level from year to year (see Table 5). The top three counties for loan volume likewise retained their top spots-Los Angeles, California; Cook County, Illinois; and San Diego, California - while other counties saw dramatic movement. Maricopa, Arizona, plummeted from fourth to 10th place, while Miami leapt by 21 spots, landing in fourth place.

By Nema Daghbandan, Esq.

Private Lender, The Official Magazine of AAPL

Published on April 8, 2024

Spring 2024, p. 28-34


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