According to the report, this is a result of stronger competition between lenders, which continued to push bridging rates down.

The data also highlighted the greatest shift in demand for regulated refinance, jumping up to 10% of total transactions — up from 5% in the previous quarter.

Overall, £178.4m of bridging loan transactions took place in Q2, 14% higher than Q1 2022.

Regulated bridging accounted for 43.3% of the market — a slight fall from Q1’s 43.9%.

While using bridging finance to chain break remained popular — with 21% of loans used for this purpose — purchasing an investment property was still the most frequent use, accounting for 24% of transactions.

Bridging loans for auction properties rose from 2% in Q1 to 4% in Q2 — according to Bridging Trends, this is a result of the heightened competition between buyers due to the housing stock shortage, which is pushing them to access bridging finance to quickly complete purchases.

The average term of a bridging loan remained at 12 months, while LTVs edged up slightly from 54.5% in Q1 to 56.1% in Q2.

However, average loan completion times rose to 57 days — up from 53 in Q1.

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Commenting on the new statistics, Stephen Watts, bridging and development finance specialist at Brightstar, said: “It is not surprising to see a 14% rise in bridging finance activity.

“The demand for property currently outweighs the number of suitable properties for sale to home buyers and investors, therefore bridging finance is being increasingly sought to enable buyers to put themselves ahead of their competition.”

Andre Bartlett, director at Capital B Property Finance, added: “There may now be some pressure on lenders to increase pricing, but we must remember that rates are at their lowest and bridging still represents excellent value for the right client. 

“The industry is still well placed to provide much-needed assistance to clients over what could be some interesting times ahead.”

Gareth Lewis, commercial director at MT Finance, stated: “The bridging market has been fiercely competitive in recent times, which has led to rate reductions and bespoke pricing being offered.

“This trend has enabled lenders to create a competitive edge to try and gain market share. 

“However, will we continue to see this in the coming months? I doubt it. 

“Base rate increases and swap rate volatility have been ever present in 2022, but their impact has yet to be truly seen in the bridging sector as it has throughout the mortgage market.

“As pressure continues to build and funding costs increase, I expect to see the start of movement in our sector in the coming months.”