Bridging lending activity continues slowdown in Q2

Bridging and development lending activity continued to slow down in the second quarter, with the Bridging and Development Lenders Association (BDLA) finding a downturn across completions, loan applications and loan book values.

In the three months to 30th June, completions totalled £1.6bn, a reduction of 15.2% compared with the previous quarter.

Applications totalled £7.3bn, down 26.3%, while total reported lender loan books fell by 10.6% to £10.3bn.

Development lending showed a smaller quarterly decline, with loans written totalling £273.5m, compared with £276.5m in Q1.

Second-charge completions totalled £101.1m, down from £131.3m in the previous quarter.

Average LTVs increased to 57.66% from 56.64% in Q1, and the reported value of loans in default fell by 0.4% quarter-on-quarter.

These figures follow the reduction in activity reported in the first quarter of the year.

In its analysis, the BDLA found this pointed to subdued property transaction activity and often protracted completion times.

With pipelines and timelines under pressure, the BDLA has emphasised the importance of due diligence and realistic assessments of how borrowers will exit their loans within the agreed term.

“The economic implications extend well beyond specialist lending,” said Adam Tyler, CEO at the BDLA.

“Housing development and property transactions support activity across construction, professional services and the wider economy.

“And this is an important part of the message we’re taking into our discussions in Westminster and with organisations including the Bank of England and the British Business Bank.”

As such, Adam said more needed to be done by policymakers to understand how the housing market was faring and, in particular, what could be done to improve conditions.

“What’s preventing transactions and developments from progressing, is there intervention that would help and what difference would potential measures make?,” asked Adam.

“Understanding those barriers is central to assessing the effects on transaction activity, housing supply and affordability.

“The BDLA will continue to contribute market evidence to those discussions, while supporting the professional standards and responsible lending practices that underpin our sector.”