The value of bridging loans written by members of the Association of Short Term Lenders (ASTL) increased by 12.9 per cent in the quarter ending 31 December 2013, compared to the previous quarter; and by 39.1 per cent year-on-year, compared to the year ended 31 December 2012.

The value of applications increased by 23 per cent year-on-year as ASTL members received applications totalling £5.3 billion, up from £4.3 billion in the year ended 31 December 2012.    This figure can include applications made to several lenders and is only a rough guide to trends.

ASTL members lent £440 million worth of loans in the quarter, up from the £390 million lent in the quarter up until the end of September, reflecting a continuing increase in business.   There was also a small increase of 3 per cent in the value of the lenders’ loan books as the total loan book at the end of period was worth £1.36 billion; up from £1.32 billion.  It’s interesting to note that, compared to the previous calendar year, loan books were up by £307 million (an increase of 29 per cent).

The figures reflect the reduction in the pace of increase expected, but still reflect the ongoing need for, and use of, bridging finance.  Short term loans continue to be useful financial tools as mainstream lenders still lag behind demand despite increased mortgage lending figures.

Property prices and sales volumes are increasing, as investors and homebuyers show renewed confidence. There is, however, a danger of overheating in some areas of the South East, as buyers scramble for residential property. The economic climate definitely seems to be improving, but it is too early to be confident that the improvement is sustainable. We expect that the pace of increase will continue to slow, but volumes will stay at present or even higher levels until interest rises are imminent.

By Benson Hersch