The latest Bridging Trends report from specialist lender MTF found that the average monthly interest rate dropped from 0.85% in Q3 2016 to just 0.78% in the fourth quarter.

This marks a 0.11 percentage point drop between the first and last quarters of 2016, suggesting that bridging finance is now becoming more affordable for borrowers.

The decline in rates was accompanied by a 3.7 percentage point increase in the average LTV to 50.6% during the Q4 2016.

However, this figure was down from the 52.8% average recorded in the first quarter of last year.

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Chris Whitney, head of specialist lending at Enness Private Clients, said: “The fall in average monthly interest rates is a reflection of continued increased competition within the industry – however, it would be more beneficial to see greater innovation within the specialist lending sphere, rather than simply keener pricing.”

The trend towards lower interest rates appears to have continued into the first quarter of 2017.

This follows the news that Precise Mortgages, Masthaven Bank and United Trust Bank have introduced lower rates across their bridging finance products.

Kit Thompson, director of bridging and development at Brightstar Financial, added: “No surprise that average rates have reduced, with increased competition in the sector, lenders have had to drop pricing to remain competitive and keep market share.”