Summer Slowdown: Growth Cools as Private Lending Shifts Beneath the Surface
August brought some of the lowest growth numbers we’ve seen in 2026. That’s not too concerning on its own as per-business-day loan counts remain near their high watermark, but same-store sales growth is clearly leveling off as competition heats up across business-purpose lending.
For a long time, readers have asked for a more detailed breakdown of our bridge loan category. This month, I’m excited to share that for the first time, we’re breaking that data out by Ground-Up Construction, Fix-and-Flip, and True Bridge (no construction holdback). That breakdown turns out to be particularly revealing about what’s been driving bridge lending growth this year, and where it’s held back.
Want the Full Picture?
The trends in this article are just a snapshot. The complete Lightning Docs Private Lending Market Report includes deeper, market-by-market detail for private lending professionals:
- Expanded Regional Breakdowns: State and metro-level data beyond the national averages shown in this article
- Above-Average Rate Markets: See exactly which regions are commanding higher interest rates, and why
- Above-Average Loan Amount Markets: Identify where deal sizes are outpacing the national norm
- Volume Heat Maps: Visualize lending activity concentration across the country at a glance
How Much Did Bridge Loan Volume Grow in August?
Bridge loan transactions among same-store users were up 2.4% year-over-year in August, the lowest growth rate since January. After a moderate but respectable growth stretch over the past six months, bridge lending has settled back into the flatter pattern seen at the end of 2025 and the start of this year.
Now is the fun part where we get to unveil how the underlying loan types are contributing to the overall bridge loan market. True Bridge (no construction holdback), Fix-and Flip (simple or standard construction reserve), and Ground-up Construction (extensive construction reserve) are the three sub categories into which we’ll dive into below.
Starting with True Bridge, it quickly becomes no surprise why we’ve seen the broader category struggle to grow this year. True Bridge is down 5.6% for the year, and the decline has accelerated recently, down 23% in July and 22% in August. As inventory has tightened across many major metros, lenders appear to be pivoting away from true bridge loans and toward the two categories below.
Fix-and-Flip is up 10.6% year-to-date, slightly outpacing the broader bridge category. August growth held at 10%, keeping pace with the yearly average, though it marked a second consecutive month of deceleration. Despite that, fix-and-flip is currently the top of these three segments in total transaction volume.
Ground-Up Construction is up more than 73% year-to-date and has become the single largest growth driver within bridge lending. Much of that is due to easy comparisons against a low base in early 2025, but even accounting for that, ground-up construction is now the top-growing product segment in 2026, outpacing even DSCR.
What Happened to Bridge Loan Interest Rates in August?
Last month’s report highlighted bridge loan rates dropping below 10% for the first time in roughly four years. That didn’t last. Rates jumped 11 basis points in August, back up to 10.10%, the largest single-month increase since December 2023. Average loan amounts rose as well, up $25,000 to a 12-month high of $733,235.
How Did Bridge Loan Pricing Shift in August?
Although average bridge loan rates increased to 10.10% in August, most loans remained concentrated in the 9.0%-10.99% range. However, at 59.8% of all originations, August marks the first month this year that the combined 9.0%-10.99% segment has fallen below 60%, reflecting a gradual shift toward higher-rate loans. Despite shrinking compared to the last few months, the largest rate bucket remained 9.0%-9.99% at 36.8%, while the share of loans above 12% continued to grow.
Which States and Counties are Leading Bridge Lending?
Texas and Ohio are the only two states to have already surpassed their full 2025 bridge loan volume. Texas remains the fastest-growing state among top bridge markets: Harris County (Houston) has climbed six spots to 4th for the year, and Bexar County (San Antonio) has climbed seven spots to 8th. Pinellas County, FL (St. Petersburg) has also moved up four spots to 10th.
California, Florida, and Texas continue to dominate bridge lending overall, accounting for 28 of the top 50 counties by transaction volume. For a deeper look at these three markets, see our recent breakdown of lending trends in California, Florida, and Texas.
What Happened to DSCR Lending Volume in August?
DSCR volume was up 15% year-over-year in August, its lowest growth rate of the year, though same-store sales still posted a respectable 3,329 loans for the month. As the year moves into its final third, matching 2025’s strong comparisons will only get harder.
What Happened to DSCR Rates and Loan Amounts in August?
After a brief pause in July, DSCR interest rates resumed climbing in August, up 2 basis points to 7.18%. Average loan amounts rose $7,000 to $330,000, the highest average since 2022, and the highest on record since DSCR volume became significant on Lightning Docs.
How did the DSCR Rate Distribution Shift in August?
Although DSCR rates ticked back up to 7.18% in August, pricing remained remarkably stable. The last three months’ relatively flat average interest rate translated to a rate distribution with very little movement, with the 6.0-7.99% band continuing to account for 90% of the DSCR loans produced on Lightning Docs. Though the sub-6% category more than doubled last month, the 8%+ group also gained over a full percentage point, illustrating the shuffling that might have accounted for the average’s upward tilt.
How are Bridge and DSCR Rates Responding to Benchmark Rates?
The 10-year Treasury rose for the fifth time in the last six months, and most other rates followed suit. I already noted the jump in bridge rates and the return to rising DSCR rates; consumer mortgage rates rose 13 basis points as well.
Even so, the spread between DSCR rates and the 10-year Treasury narrowed further, to 2.50%, and the gap between DSCR and consumer mortgage rates fell to just 51 basis points. Both point to increasingly strong demand for DSCR product in the capital markets.
Which States and Counties are Leading DSCR Lending?
A handful of states just outside the DSCR top 10 are worth watching. Missouri posted 142 loans in August, keeping pace with 10th-ranked Georgia’s 143. #12’s Illinois outperformed both with 153 loans and sits just outside the top 10. Tennessee, one spot lower for the year, had 157 DSCR loans in August and has essentially doubled its monthly volume since January.
Harris, Texas (Houston) is not just a standout bridge market, but is also now the #3 DSCR market for the year. Harris has become what Cook, IL (Chicago) was last year, the only market to appear in the top 5 of both product segments. Another market to watch is Shelby, TN (Memphis): with 77 DSCR loans in August, it was the 6th most productive county of the month.
August’s Private Lending Takeaways: What Does the Data Mean for Lenders and Investors?
August’s headline is a market that’s cooling on the surface but shifting underneath. Overall bridge and DSCR growth rates hit their lowest points of the year, but the new loan-type breakdown shows bridge lending’s story is really about Ground-Up Construction and Fix-and-Flip picking up the slack as True Bridge volume keeps shrinking. Rates moved higher across the board in August, yet spreads between DSCR and benchmark rates kept compressing, a sign that secondary market demand for DSCR hasn’t slowed even as growth rates have.
Definitions
A bridge loan is any loan with a duration of 36 months or less utilizing interest-only payments for the duration of the term and containing a balloon payment at the end of the loan. Bridge loans are commonly referred to as residential transition loans (RTL), fix-and-flip, non-owner occupied, hard money, or in other terms that describe a short-term loan generally secured by a residential property for investment purposes.
DSCR loans are 30-year term loans secured by rental properties. DSCR stands for Debt Service Coverage Ratio, which identifies that the primary underwriting for these loans is done by dividing the monthly net operating income of the property by the monthly debt service.
A User refers to a unique company using the Lightning Docs platform. If multiple individuals within the same company access the platform, they are collectively counted as a single user.
Methodology
Loans below $50,000 and above $5,000,000 have been removed from the data set.
Loans with interest rates below 4% and above 20% have been removed from the data set.
For the loan volume slides, the user must have signed up with Lightning Docs prior to 2025.
