Average interest rate falls to 0.81% in latest Bridging Trends report

According to the report, rate reductions in borrowing costs were directly linked to the decrease in base and swap rates and reduced weighted average LTV — continuing the downward trajectory from the previous year.

Application volumes increased steadily by 11% year-on-year from to 460 in Q2 2025, from 415 the previous year, while quarter-on-quarter growth remained steady with a 2% increase from Q1 of this year.

Of the loans produced, 10% were second charge, while the other 90% was made from first charge, with the total gross lending remaining stable at £199.7m in Q2 of this year, just a 1% fall from both the previous quarter (£202m) and Q2 2025 (£201.8m).

The average LTV remained consistent at 54%, while the average loan term also stayed consistent at approximately 12 months.

In terms of bridging loan purposes, regulated finance was the top reason at 18%, up from 10% last quarter, while chain break came in second at 17%, unchanged from Q1, and third was investment purchase at 16%, down from 23%.

Auction purchases also saw a slight increase, rising from 12% of loans in Q1 2025 to 13% in Q2 2025.

Refinance activity increased in Q2, with regulated refinance increasing by 76% from 46 in Q1 2025 to 81 in Q2 2025, while unregulated refinance increased by 63% from 30 in Q1 2025 to 49 in Q2 2025.

Regulated accounted for the largest proportion of loans by purpose at 18% in Q2 2025, up from 10% in Q1 2025.

Data provided by Knowledge Bank revealed that development bridging and development finance was the top criteria search by UK bridging finance brokers in Q2.

Gareth Lewis, deputy CEO at MT Finance commented: "The latest Bridging Trends report highlights a resilient market adapting to current economic conditions.

“The reduction in interest rates combined with consistent application volumes suggests a healthy appetite for bridging finance.

“We are also seeing a clear shift in loan purposes, with refinance and auction purchases playing an increasingly significant role.

“We expect continued sector stability and favourable market conditions throughout 2025 as lenders continue to improve operational efficiency on all fronts.”