Gareth Lewis

Regulated bridging lending hits lowest level since 2015

Regulated bridging loans have fallen to 36.8% of lending in Q2 2018, down from the 43.7% recorded in Q1, according to new research.

The latest Bridging Trends data from mtf revealed that this was the lowest level of regulated bridging loans since 2015.

It has also been announced that three new contributors have joined Bridging Trends: Complete FS, Finance 4 Business and Pure Commercial Finance.

The news comes as bridging loan volumes transacted by contributors hit £197.94m in Q2 2018, an increase of £43.9m on Q1 2018.

"The new additions to Bridging Trends [have] given us a better spread of data reflecting a truer market commentary, this has been seen with the decrease in [the] regulated figure,” said Gareth Lewis, commercial director at mtf (pictured above).

The report also found that over a third of all lending in Q2 was for refurbishment purposes, up from 18% during Q1 2018.

This marks the second time refurbishments was the most popular purpose since Bridging Trends was launched in April 2015; the first time was during Q2 2017.

However, bridging loans for mortgage delays and auction purchases were down on the previous quarter, falling by four and 13 percentage points, respectively.

Average LTV levels in bridging increased by 7.8 percentage points in Q2 to 56.9%, while the average monthly interest rate remained at 0.83% for the third consecutive quarter.

In Q2 2018, turnaround times were quicker as the average completion time on a bridging loan application fell by five days to 43 days.

In addition, the average term of a bridging loan in Q2 remained at 11 months.

“[It is] unsurprising to see that refurbishment is the most popular purpose, especially given more property investors are looking to add value to property to help improve yield and capital value," added Gareth.

Chris Whitney, head of specialist lending at Enness, said that he didn’t think many people would be surprised to see refurbishment loans taking centre stage this month.

“The industry caters for such a broad spectrum of refurbishment finance now from large projects needing planning permission to minor alterations.

"[I’m] slightly surprised to see regulated loans down so much as we still see a lot of transactions where borrowers are taking advantage of these refurbishment loans on their own homes and then refinancing them out with a term loan once works are completed and value added.”


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