In 2021 and 2022, bridge financing was cheap. Lenders were hungry. Rates were 4-5%. Origination was 0.5-0.75%. It was a no-brainer for any sponsor with interim capital needs.

Then 2023 happened. Bridge lenders panicked. Rates spiked to 10-12%. Origination doubled. Bridge became toxic—something you only did when traditional capital didn't exist.

Now, in 2024, bridge is repricing. Rates are back to 7-8%. Origination is 1-1.5%. And sponsor psychology is shifting. Bridge is becoming a tool again, not a last resort.

Why bridge got expensive

In 2023, bridge lenders got scared. The story was simple: developers had taken bridge financing at 4-5% rates. Then rates rose. Their permanent debt didn't close. Construction costs overran. Sponsors defaulted. Lenders lost money.

So bridge lenders overcorrected. They demanded higher rates to cover losses they'd taken. They demanded equity kickers. They demanded guarantees.

It made sense from a risk perspective but destroyed the market. Bridge became unavailable for anyone but the strongest sponsors with equity capital to subordinate.

Why bridge is coming back

The psychology has shifted. Bridge lenders have seen that rates are sticky at 7-8%. They're not going back to 3%. That reality allows them to model forward permanent debt rates accurately and underwrite bridge with confidence.

Senior lenders are also more stable. There's clarity. That clarity translates to bridge lenders feeling comfortable that sponsors will have permanent debt options when their bridge is approaching maturity.

And sponsors are using bridge strategically again, not desperately. Timing mismatches between equity and permanent debt. Starting construction before permanent debt closes. These are legitimate uses. Bridge isn't a sign of distress anymore—it's a tool.

Where bridge fits

Bridge works best for:

• Development financing while permanent debt underwriting completes

• Acquisitions before equity closes

• Construction financing before stabilized asset qualifies for permanent debt

• Refinancing before market conditions favor permanent debt