The latest figures compiled by auditors from data provided by members of the ASTL revealed that £900.76m worth of loans were written (a 1.9% decrease compared to the previous quarter), while £7.49bn worth of loan applications were registered (12% higher than in Q4 2020).

The conversion rate for the year ending Q1 2021 stood at 11%, down from 17% year-on-year. 

According to Vic Jannels, CEO at the ASTL (pictured above), the lower conversion rate is likely to be a combination of more rigorous underwriting by lenders, brokers hedging their bets by submitting multiple applications to multiple lenders and some cases where bridging is no longer required by the time of the completion date. 

“We should keep a watchful eye on this trend as a decreasing conversion rate for loans benefits nobody in the process,” he added.

In the 12 months up to 31st March 2021, completions were down by 24.1% on the previous year, reflecting the period of low activity during last year’s lockdowns.

•   Why is the mortgage market for owner-occupied trading businesses underserved?
•   Almost 90% of bridging lenders think the turnover of their business will grow in the next six months
•   Value of bridging loans in default in Q4 2020 grew by almost 24%

The value of bridging loan books dropped to £4.4bn at the end of Q1 2021, a slight decrease on the previous quarter and down by 3.5% on the same period last year.

Positively, the value of loans in default showed a decrease of 4.5% compared to December 2020. 

The value of loans in default is now 2.2% higher than March 2020.

“The Q1 lending figures reflect the story we are hearing from the market, that everyone is busy with new business applications,” said Vic.

“In fact, the value of applications in the first quarter of 2021 was more than a quarter higher than the same period in 2021, which was mostly unaffected by the Covid pandemic.

“On a more positive note, the value of defaults decreased on last quarter and is only a little higher than it was at the start of the pandemic. 

“This reflects the hard work of all of our members in working with their existing customers over the last year and, with positive signs for the economy ahead, we have reason to believe that this trend can continue.”