Bridging loan volumes rose 10.7% to £534.1m in 2017, according to the latest Bridging Trends data from mtf, Brightstar Financial, Enness, Positive Lending and SPF Short Term Finance.
A total of £118.79m of bridging loans were completed by Bridging Trends contributors in the first quarter, before soaring to £150.7m in the second quarter – the highest level of loans transacted by contributors in a single quarter since Bridging Trends launched in 2015.
Volume cooled slightly in the second half of the year, dropping to £142.75m in Q3 and to £122.49m in Q4.
Regulated bridging loans increased market share on previous years to an average of 46% in 2017, compared to 44% in 2016 and 36.6% in 2015. Regulated bridging loan activity outperformed unregulated bridging loans for the first time in the first quarter of 2017.
By contrast, average loan-to-value levels dropped to 46.6% in 2017, down from 49% in 2016, while average monthly interest rates remained consistent throughout the year at 0.83%, dropping slightly from 0.85% in 2016 and 0.91% in 2015.
Average loan terms remained consistent in 2017 at 12 months – up from 11 months in 2016. Average completion times averaged 43 days in 2017, down from 45 days in 2016.
Mortgage delays were again the most popular reason for clients taking out a bridging loan in 2017 at 29% of all lending, although this was a reduction from 2016 when they accounted for 34% of activity.
Joshua Elash, director of mtf, commented: “The continued growth in lending volume in this sector … evidences the extent to which bridging finance is now increasingly a mainstream financial solution.
“It is interesting to note what appears to be a direct correlation between the data reported and the macro-economic and regulatory changes which have impacted upon the market. We have, for example, in this annual reporting cycle, seen regulated bridging finance lending outstrip unregulated bridging finance for the first time. This follows on from the implementation of the mortgage credit directive and the consequential introduction of a new class of regulated “consumer” buy to let lending.
“Equally we are interested to note that again for the first time since reporting began, refurbishment to existing investment property was the most popular reason for borrowing during Q2 of last year. This follows on from increases in the stamp duty taxes payable on the acquisition of new buy to let properties and indicates a potential strategy shift amongst professional property investors towards value enhancement.”