Lorna O’Brien, technical specialist in the mortgage sector team at the FCA (pictured above), explained that while data painted a “rosy picture” of the sector, she suspected that maybe not all regulated bridging loans were being reported to the regulator.

“The volume of regulated bridging sales appears to be on an upwards trend, but overall the volumes reported do remain relatively low,” Lorna said.

“Compared with the recent figures published by the ASTL which … indicate that members lent £3bn in the year up to Q2 2017, and that compares to figures reported to us for regulated bridging of £686m, so that seems to suggest that regulated bridging makes up less than a quarter of total sales in the bridging market.

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“…But I have heard commentators in the market say that the split is maybe closer to 50/50 or 40/60 … so I would really like to take this opportunity to remind you that if you are doing regulated mortgages [or] regulated bridging please do report it.”

The characteristics of the regulated bridging market

Lorna explained that around 40% of regulated bridging loans were in London and the South East and the average customer age was around 56.

Customers were also more likely to be self-employed or retired when compared with other regulated mortgage lending.

Other customer characteristics of the regulated bridging market include:

• Median loan value: £208,750
• Median property value: £550,000
• Median LTV: 44%
• Channel of sale – intermediary: 86%
• Detached houses: 51%

“…Overall, this data underlines the differences between bridging and other types of mortgage lending … and it paints quite a rosy picture of the sector that’s a long way from the heavily indebted, sub-prime borrower who’s using bridging as a last resort,” Lorna continued.

“But, of course, this is based on the data you report to us and this is regulated firms, and we do, of course, remain vigilant to what’s happening outside the regulatory perimeter and we will continue to monitor that.”

Lorna concluded: “It’s still early days and I still suspect that maybe not all regulated bridging loans are being reported to us at the moment – which, again, I would like to say to regulated firms: please make sure that you are reporting correctly.”