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Bridging applications climb but completions dip, new data has revealed

Bridging lenders experienced a ‘busy’ Q1 with new applications soaring by 25.5% compared to the same quarter in 2020 to hit £7.49 billion, new data has revealed.

The value of new bridging applications in Q1 2021 was 12% higher than in Q4 2020 and 17.9% higher on the previous year in the 12-month period ending 31 March 2021, according to the data provided by members of the Association of Short-Term Lenders (ASTL).

The information, compiled by auditors, reflected feedback from the market demonstrating increased demand from customers, the ASTL said.

The statistics also revealed completions in Q1 2021 fell by 1.9% on Q4 2020 but were up by 10.7% on the same period last year.

In the 12 months up to 31 March 2021, completions were down by 24.1% on the previous year, reflecting the period of low activity during last year’s lockdowns.

Meanwhile, the value of bridging loan books dropped to £4.40 billion at the end of Q1 2021, a slight decrease of 1.7% on the previous quarter but down by 3.5% on the same period last year.

There was positive news regarding defaults. Indeed, the value of loans in default showed a decrease of 4.5% compared to December 2020. The value of loans in default is now just 2.2% higher than March 2020.

Vic Jannels, CEO of the ASTL said: “The Q1 lending figures reflect the story we are hearing from the market, that everyone is busy with new business applications.

“In fact, the value of applications in the first quarter of 2021 was more than a quarter higher than the same period in 2021, which was mostly unaffected by the Covid pandemic.

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“The value of completions remains relatively steady, which means we are seeing an increasing number of bridging loan applications that are not progressing through to completions.

“This is likely to be a combination of more rigorous underwriting by lenders, brokers hedging their bets by submitting multiple applications to multiple lenders and some cases where bridging is no longer required by the time of the completion date.

“We should keep a watchful eye on this trend as a decreasing conversion rate for loans benefits nobody in the process.

“On a more positive note, the value of defaults decreased on last quarter and is only a little higher than it was at the start of the pandemic.

“This reflects the hard work of all of our members in working with their existing customers over the last year and, with positive signs for the economy ahead, we have reason to believe that this trend can continue.”

Source: Mortgage Finance Gazette

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ASTL: Bridging applications leap to record levels in Q3

Activity in the bridging market reached record levels in Q3 with completions rising by over 40% and applications hitting an all-time high, the Association of Short-Term Lenders (ASTL) has revealed.

The latest figures from its members show applications totalled £7.6 billion in Q3 2020, representing an increase of 39.1% over the previous quarter and an increase of 25.7% on the same period in 2019.

Completions in Q3 2020 were £680 million, which was an increase of 44.8% on Q2, although still down by 27.6% on the same period last year. This reflected the influence of the first national lockdown on the previous quarter’s originations activity, the ASTL said.

Loan books showed a small increase of 0.6% on the previous quarter and 5% on the same period last year – remaining at around £4.5 billion. While average LTVs increased slightly since Q2, but continue to remain at sub-60%

The value of loans in default showed a small increase of 3.3% over Q2 2020 but were 23.1% higher than the same period last year, as borrowers continued to feel the financial impact of the pandemic.

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Vic Jannels, CEO of the ASTL says: “The Q3 lending figures from the ASTL reflect feedback from the market demonstrating that this has been a hugely busy period for bridging lending.

“Applications over the quarter totalled £7.6 billion, which is the highest figure we have ever recorded. Completions also bounced back on the previous quarter but remain down on last year as an overhang of the first national lockdown.

“We’re unlikely to see this overhang again as the market remained open during the second lockdown – but we must still remain cautious about the future, as the road ahead remains full of economic uncertainty.

“That said, if the recent positive news about vaccines come to fruition and lenders continue to underwrite loans sensibly, whilst taking a proactive and collaborative approach to customers in default, then there is no reason why this quarter’s figures should not prove a strong foundation for a robust and sustainable recovery.”

Source: Mortgage Finance Gazette

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