With market headwinds subsiding and originations rising, Colonnade believes that the Business Purpose Lending industry is poised for a strong upcoming year and an attractive long-term investment opportunity.

The industry serves an essential need in the real estate value chain, and demand for its services will continue to increase. Consumer demand for housing and elevated housing prices continue, further driving demand for updating older homes. For institutions, larger and more established players will continue to command a competitive advantage, promoting increased industry consolidation among the smaller lenders.

Following a period of industry headwinds, the institutions that survived are those that successfully developed reliable and consistent origination networks and consistent funding sources. These groups win on levels of service, experience, leverage, rate, speed/execution, and capital availability.

In summary, subsiding headwinds, long-term industry tailwinds, increasing originations, more access to capital, and continued market demand are paving the way toward significant investment activity and consolidation in the sector over the next 24 months.