bridging loan

The JaeVee group has said it is in the process of buying back both the Eastern Escape and the Ferry Boat Inn sites using a bridging loan and that the interests of investors in these projects were being protected.

Most properties still sell within the three-month timeframe of a standard bridging loan: The average home in Australia's major cities took 31 days to sell in August, while sellers may also factor in a contract settlement time of about six weeks.

But bridging loan providers say their volumes have jumped, even as retail banks warn of rising competition and shrinking business in mortgage lending overall.

"We put our rates up and braced for a slowdown, but it's still full steam ahead," said Jack O'Reilly, CEO of funding.com.au, a bridging loan specialist whose monthly loan volumes are up 50% from a year ago.

Australia's housing market downturn is squeezing many home sellers into a double bind: They've taken out a mortgage for a new home but are holding out for a good deal on their old place, forcing them also to hold a bridging loan to cover their previous mortgage.