Bridging Trends

Regulated bridging, LTVs and completion times dip in Q2

The latest Bridging Trends data revealed that regulated bridging loans transacted by contributors fell from 47.7% to 41.6% in Q2.

Demand for regulated refinance also saw a significant change during the quarter, dropping to 5% of deals from 13% in the previous quarter.

Overall, the bridging finance market held steady at £146.52m, slightly higher than Q1 (£144.51m), with many property investors and landlords having taken advantage of tenant demand and the stamp duty holiday deadline to expand their portfolios.

First-charge bridging loan applications soared during the period, again motivated by the desire to take advantage of the full stamp duty holiday — accounting for 90% of total market volume, a leap from 77.8% in Q1.

Funding the purchase of an investment property returned as the most popular use for bridging finance in the second quarter, at 24% of all transactions – up from 19% in Q1.

A traditional chain break was the second most popular use of bridging finance at 20% of cases, slightly down from last quarter’s result (21%).

The average completion time also saw a positive change, going down to 47 days, the lowest figure recorded since Q2 2019.

The average monthly interest rate stood at 0.79%, marginally higher than in Q1 (0.74%), while average LTV levels decreased to 54.9%.

Average loan terms remained at 12 months.

Chris Whitney, head of specialist lending at Enness, said: “It looks like we have reached quite a stable platform over the last two quarters. 

“Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity. 

“The higher level of investment purchases shows confidence in the UK property market is strong.

“I am slightly surprised that lending volumes weren’t higher; the market certainly felt very busy as we struggled to get valuers out in a timely manner due to volumes, and many solicitors had to burn the midnight oil to keep up with demand.”

Matthew Corker, operations director at Knowledge Bank, commented: “We've seen a dramatic rise in searches across our bridging section throughout this quarter. 

“Interestingly, we've also seen a general rise in search numbers in more traditional bridging categories, suggesting that the usual summer lull may not be as pronounced this year.”

Gareth Lewis, commercial director at MT Finance, stated: “As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first-charge lending has significantly increased its share of transactional volumes. 

“It will be interesting to see if this percentage decreases in the coming months as consumers look to raise finance out of existing properties to fund further property acquisitions or businesses.”

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