Bridging Trends reveals latest figures

Michael Lloyd

July 25, 2019

For the second consecutive quarter, the most popular use of a bridging loan was to purchase investment property according to the latest Bridging Trends data.

This reason for taking out a bridging loan contributes to a quarter of all lending in Q2 2019, which is a year-on-year increase of 22%.

Gareth Lewis, commercial director at MT Finance, said: “Now that Boris Johnson has been announced as the new PM and has made Brexit top of his to-do list, this should help give the market the certainty it needs.

“If the rumours of a stamp duty overhaul are true- we expect the change to ease the pressures of regulation and excessive taxation on UK property investors.

“It will be interesting to see what happens over the coming months, but hopefully the sector can look forward to buoyant growth.”

The data highlights how bridging finance has become an increasingly attractive proposition to property investors who are looking to expand their portfolio quickly to capitalise on opportunities while property prices are low.

A traditional chain-break was the second most popular use for bridging finance in the second quarter, contributing to 18% of all lending.

Meanwhile, bridging loans for business purposes increased to 12%, up from 8% in Q1 2019.

Dale Jannels, managing director at Impact Specialist Finance, added: “I’m not surprised that chain break finance was the second most popular reason for obtaining bridging finance in the last quarter.

“We are in uncertain times and this uncertainty transfers into property transactions also.

“Customers are also being gazumped and looking for short-term finance assistance to speed up the purchase of their dream property.

“Add in the complexity of many property transactions and the high-street lender will say no, yet short-term finance might get them over the initial line.”

The data also showed that bridging growth stabilised in the second quarter, with bridging loan volume hitting £184.82m.

Average LTV levels increased by 1.55% in the second quarter to 52.85%.

Meanwhile the average monthly interest rate in Q2 was 0.79%, representing an increase of 0.05% on the previous quarter.

The number of regulated loans transacted by Bridging Trends contributors was 37.5% in Q2 2019, with second charge loan transactions reaching 18.7%.

For the third consecutive quarter, the average term of a bridging loan remained at 12 months.

Whilst the average completion time on a bridging loan application in the second quarter increased by four days to 44.

Kit Thompson, director of short-term lending and development at Brightstar Financial, said: “There continues to be opportunities for property investors to grow and diversify their portfolio and bridging finance provides a fast and flexible form of funding that enables them to leverage their capital and make the most of these opportunities.

“This is a trend we expect to see continuing well into the future.”

Bridging Trends groups together the figures from MT Finance and various specialist finance brokers.

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