Bridging lending up 54%

The quarterly publication covers the UK bridging finance market and is produced by specialist finance companies MTF, Brightstar Financial, Enness Private Clients, Positive Lending and SPF.

The report found that total contributor lending increased 54% to £140.49m in the third quarter of 2016.

Second legal charge lending increased to 19.4% of all loans during Q3 2016 (Q2 16%).

The number of unregulated bridging loans still outweighs the number of regulated loans, though regulated loans are on the rise from 48.4% in Q2 to 49.2% in Q3.

For the sixth consecutive quarter it was found that mortgage delays were the most common reason for taking out a bridging loan, comprising 30% of all bridging volume during Q3 2016.

Refurbishment and business purposes were the second and third most popular reasons.

The average loan to value (LTV) fell to 46.9% in Q3 from 47.4% in Q2, while average monthly interest rates in bridging fell to 0.85%.

Joshua Elash, director of bridging finance lender MTF, said: “The figures are very positive with a large increase in the reported levels of lending. 

“We also see a significant increase in the total percentage of the reported lending activity which is regulated. 

“This invariably is attributable to the implementation of the MCD, with its introduction of regulated consumer buy-to-let lending.

“This larger total percentage of regulated lending appears to have had an adverse impact on the average time a loan takes to complete, and more positively on the average weighted monthly interest rates being charged. 

“The results continue to point to bridging finance as an important financial tool, with demand remaining strong at sensible LTVs.”

Paul McGonigle, managing director of Positive Lending, added: “The results [in] the report reflect accurately how our business has seen Q3 with a stronger appetite from both potential clients and lenders. 

“Following Brexit, some lenders took a more conservative view, and rightly so as the property market was carefully monitored. 

“In Greater London, the market has held its breath, but now we are in a position where at present the potential reductions are not as drastic as first feared.

“This, of course, will still need careful monitoring for some time to come. 

“We received many more HNW [high-net-worth] clients during this period than ever before and this reflected in our results in Q3. 

“I would anticipate that Q4 will follow the same pattern.”