Bridging loan activity saw a quarterly increase of 26% to £150.1m.
Data from Bridging Trends suggests the increase “rocketed” as bridging lenders brushed off potential volatility from Brexit and the UK General Election to fill a liquidity gap left by mainstream lenders.
Average loan-to-value levels dropped to a new low of 45.4% during the quarter; the lowest levels since Q1 2015.
Mortgage delays continued to be in the list of popular reasons as to taking out a bridging loan at 25%, yet it is first time since Q1 2015 that the reason didn’t top the list.
Paul McGonigle, chief executive of Positive Lending, said: “I am not surprised that the report shows increased lending figures, particularly in the non-regulated refurbishment market.
“This has certainly been the growth area for Positive Lending and whilst this reflects in the bridging sector too, with some lenders, there are others that have the experience and appetite to assist.”
Joshua Elash, director of mtf, added: “Demand for specialist finance remains strong.
“Most interesting however, for the first time since reporting began, mortgage delays are not the most popular use of a bridging finance loan, having been replaced by refurbishment.”
Unregulated bridging continued to dominate the lending market at 53.9% according to the report which corresponded with an 11 day decrease in average completion times for bridging loan applications.
Kit Thompson, director, short term lending and development at Brightstar, said: “It is great to see the completion time dropped down to 39-day average, which I think is as a result of more non-regulated transactions.
“The property professional is usually looking to get the deal done fast and move on to the next project, so we would expect completion times to fall as unregulated loans increase.”
Second charge lending increased to 17.2% of all loans during the quarter, which is a quarterly increase of 13.4%.
Chris Whitney, head of specialist lending at Enness Private Clients, added: “Second charges are increasingly popular as borrowers want to hold on to historic low rate deals but can’t get the same lender to provide further advances.
“I think we have seen rates fall in the second charge market and lenders, such as Castle Trust, with specific products for this.”
“Whilst it is too early to form any conclusions this may be indicative of a shift in the market.”
And Chris Borwick, director at SPF Short Term Finance, said: “The report as a whole re-iterates the fact that the bridging market is going from strength to strength.
“An increasing number of lenders are coming to the fore with innovative products, as well as customers being made more aware of its uses and benefits.’’