Bridging Trends

Minor shift in average bridging rate – still at 0.8%

The average monthly interest rate in 2018 for bridging fell to 0.81%, only marginally down from the 0.83% average recorded in 2017, according to the latest Bridging Trends data.

Interestingly, this was despite a number of lenders cutting their bridging rates last year.

The average LTV also only increased to 55%, up from 47% in 2017 and 49% in 2016.

Unregulated bridging hit an average of 64% of all transactions in 2018, while regulated bridging business  decreased to an average of 36% last year, down on the 46% recorded in 2017 and 44% in 2016.

Bridging Trends

First charge bridging loans accounted for 83% of the market in 2018, while second charge loans remained at an average of 17% – the same average volume as 2017.

Chris Whitney, head of specialist lending at Enness Global Mortgages, said: “I think we will see demand increase this year for second charge loans, with some first charge holders having Brexit worries coupled with the fact that – as we have seen in this quarter’s data – pricing continues to see downward pressure, making it a fast, simple cost-effective solution for many borrowers. 

“It can be particularly attractive for borrowers who have very attractive historic mortgage deals that would not be available now and can’t borrow any more on that product. 

“Adding on a good second charge loan can give a surprisingly low overall blended rate.”

Bridging loan volume transacted by contributors reached £766.9m in 2018, an increase of £232.8m on 2017.

This figure comes as four new contributors joined the Bridging Trends study in 2018: Clever Lending, Complete FS, Pure Commercial Finance and Y3S.

Demand for bridging loans for business purposes increased on average to 14% (2017: 12%), while the average proportion of loans advanced for property refurbishments increased to 28% (2017: 23%).

The average loan term was 11 months, down from 12 months in 2017.

Gareth Lewis, commercial director at MT Finance, added: “Investor sentiment is resilient and investing in property to add value and improve returns was evidently a long-term trend throughout 2018. 

“With Brexit still uncertain, the first quarter’s data will be interesting reading, but I expect demand for bridging finance will remain strong and the product will continue to provide vital support for property investors.”

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