Bridging Trends data

Despite perception of rising bridging LTVs, average drops to just 51%

The average LTV levels for bridging loans decreased to 51.3% in Q1 2019, according to the latest Bridging Trends data.

Levels had been at 57% in the previous quarter, with the decrease possibly due to larger transactions at lower levels.

Chris Whitney, head of specialist lending at Enness, said: “It's still surprising [that] in a market where some lenders seem to be fighting for market share by increasing LTVs, the average LTV in the index is still only 51%.

“In terms of volume, I think we see more demand for higher LTVs across the board, but the average LTV is possibly dragged down by larger transactions at low levels, ie we have just completed a £5m facility against a £26m asset.”

Two new contributors — Impact Specialist Finance and UK Property Finance — have joined the Bridging Trends survey.

The study also found that the average monthly interest rate for a bridging loan fell to 0.74% in Q1 2019, down from 0.80% in the previous quarter.

This was the lowest rate ever recorded by Bridging Trends since its launch in 2015.

The number of regulated bridging loans conducted by contributors increased to 38.3% in Q1 2019 (Q4 2018: 31.6%).

Bridging loan volumes hit £185.32m, an 8% decrease on the £201.57m recorded in the previous quarter.

The purchase of an investment property was the most popular reason for borrowers taking out a bridging loan (22%), followed by chain-breaking purposes (19%).

Gareth Lewis, commercial director at MT Finance, added: “Property investors are continuing to turn to bridging finance as a support tool, as reflected in the 22% utilising the product for investment purposes.

“With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those property investors who are looking to expand their portfolio and need certainty when conducting their business and who often need to move swiftly to capitalise on an opportunity.”

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