Bridging finance up by 33% in Q3

According to data released today, bridging finance enjoyed a rise of 33% during the third quarter of 2015, defying the summer slowdown and the impact of wider global macro volatility.

The Bridging Trends survey, which was conducted by MTF, reveals that contributor lending activity increased from £99.1m in the second quarter to £131.7m during the third quarter of 2015.

Mortgage delays continued to be the most popular reason for accessing bridging finance, rising to 37% of all lending, from 33% in Q2 2015. The next most popular reason for using a bridging loan was refurbishment, contributing to 21% of all lending.

The data also pointed to the fact that first charge lending is still solid, and is evidence of significant investment in residential properties to let.

Similarly, second legal charge lending for the quarter rose to 20%, from 14.9% during Q2 2015.

Impacted by a boost in unregulated business, which increased to 68% in Q3 from 53.3% in Q2, the average LTV rose to 50.9%.

Service and resource levels were however affected by annual leave during the summer months, as seen in the average completion on a bridging loan application, which slowed to 46 days during the third quarter, from 39 in the second quarter.

The average term of a bridging loan dropped to 10 months in the third quarter, from 11 months in the first and second quarters.

Joshua Elash, director at MTF, said:

“The recent data is interesting as we are beginning to see a degree of consistency in the key market parameters we are seeking to benchmark.

“The percentage of first charge business versus second charge, the average monthly interest rates, average terms, and the LTV data shown in the first three quarterly reports are all sufficiently consistent to begin to give us reliable insight into the bridging finance market.

“We are however, surprised to see the average number of days being taken to complete a bridging loan lengthening out further from what already appeared to be a rather extended period of 39 days as per the Q2 results. This may be a seasonal anomaly and we are interested to see how this figure will shift as we move into the final quarter of the year.”


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