This is the lowest bridging rate recorded since Bridging Trends launched in 2015.

According to the research, the drop in pricing is driven mainly by the boost in regulated lending over the past three months, as demand for regulated bridging loans has increased for the first time since Q1 2021.

The number of regulated loans conducted by contributors rose to 43.9% in Q1 2022, compared to 36% in Q4 2021.

The spike in regulated bridging activity translated into lower LTVs, with the average LTV in Q1 decreasing to 54.5% from 57.3% in the previous quarter.

The average term of a bridging loan remained at 12 months during the first quarter, while average completion times dropped to 53 days, lower than the average of 56 days recorded in Q4 2021.

Overall, gross bridging lending hit £156.78m in Q1 2022 — a 7.8% increase on the previous quarter, and 8.5% higher than in Q1 2021.

According to the study, more borrowers turned to bridging finance in Q1 to help unlock property transactions, allowing them to meet deadlines and utilise the flexibility bridging is known for.

For the fourth consecutive quarter, the most popular use of a bridging loan was to purchase an investment property, accounting for 26% of all loans — down from 29% in the previous quarter.

The second most popular reason for bridging finance was funding a chain break.

Trying to get property purchases moving accounted for the greatest increase in demand for bridging, jumping to 23% of all lending from 18% in Q4 2021.

Meanwhile, bridging loans for business purposes saw the greatest decrease in demand, with total transactions falling from 15% to 10% — according to Bridging Trends, this could be due to business owners becoming more wary about starting or investing in new businesses in the current economic climate.

Due to more purchase transactions over the quarter, the volume of second-charge bridging transactions dropped, falling to 11.9% of all loans during Q1, from 17% in the previous quarter and 22.2% in the same period last year.

•   How to energise your team and get at least 10% more return on your salary investment
•   Bridging lending surges and average LTVs hit record high in 2021
•   Bridging lending returns to 2018 levels, reveals Bridging Trends data

Kimberley Gates, head of corporate partnerships at Sirius Property Finance, said: “It comes as no surprise that bridging loan transactions have increased again from the previous quarter — the property market continues to be turbulent for a variety of well-publicised reasons, so borrowers are looking for increasingly innovative ways to structure their debt. 

"The stigma surrounding bridging also continues to subside, as more investors, developers and homeowners are starting to see it as a useful tool for realising their real estate goals and no longer as a last resort.”

Sam O’Neill, head of bridging at Clifton Private Finance, commented: "It's good news across the board; increased borrowing and lower rates — what’s not to like?

"The increase in chain break transactions and regulated bridging is another positive sign; an increasing number of homeowners are seeing bridging finance as something they can confidently rely on and trust as a viable financial product. 

“When looking for reassurance that the industry is going in the right direction, we can’t ask for more positive feedback than that. 

“We have seen some lenders capitalise on the ever-decreasing USPs available in the market, but smaller loan amounts at decent rates have been snapped up, so I think the minimum loan amount criteria search might see some traction over the next quarter. 

“I don’t see this hugely boosting lending volumes, but perhaps this may be reflected in transaction volumes.”

Dale Jannels, MD at Impact Specialist Finance, added: “This latest Bridging Trends highlights more than ever that cash is king — this applies to homeowners wishing to get their offer accepted before they have sold their own property, as well as investors wanting to raise funds quickly to invest in stock or refurbish existing to achieve better yields for example.

“The shortage of suitable housing stock will undoubtedly drive increased volumes in the bridging sector for the foreseeable future.”