Marketing No Comments

£4.94bn Lent Via Bridging Loan Completions in 2022

New market analysis has shown that £4.94bn was lent via bridging loan completions in 2022, a 17.6% annual increase and a figure that is expected to rise further to £5.59bn annually by 2025.

Bridging finance specialists analysed bridging market trends based on data from the Association of Short Term Lenders, looking at how the homebuyer reliance on bridging has grown since 2019 as well as forecasting how the bridging sector will fare over the next few years.

The figures show that a total of £4.94bn was lent via bridging loans in 2022, a 17.6% annual increase when compared to the £4.2bn in bridging loans completed in 2021.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

This figure also sits 24% higher than the pre-pandemic market in 2019 when £3.99bn was lent via bridging loans.

Additional analysis of bridging trends data shows that investment purchases were the primary reason for bridging market activity, accounting for 23% of all loans issued.

Chain breaks also accounted for a sizeable sum of lending, stated as the reason behind 20% of all bridging loans.

Heavy refurbishment (13%), unregulated finance (11%) and business purposes (9%) also featured within the top 5 reasons behind bridging loan market activity in 2022.

Based on current trends, it’s also forecast that bridging market activity is expected to increase over the coming years, climbing by 2.4% this year, with total lending expected to hit £5.59bn annually by 2025.

Discover our Bridging Loan services

Chris Hodgkinson, Managing Director of Apex Bridging, the bridging finance specialists responsible for the analysis, commented:

“With the exception of the market dip seen in 2020 due to initial pandemic market restrictions, the bridging sector has gone from strength to strength in recent years and we’re now seeing considerably more lent via bridging loans on an annual basis, even when compared to the pre-pandemic market in 2019.

There’s a common misconception that bridging is really only utilised in times of crisis in order to save a transaction from collapse and while this is certainly the case to some extent, it’s far from the only reason that many buyers and investors utilise bridging loans.

The sector is utilised by a range of buyers and investors for a myriad of reasons and as the traditional mortgage lending space becomes increasingly more difficult, not to mention expensive, we expect to see the reliance on bridging loans continue to increase over the next few years.”

Source: Property Notify

Marketing No Comments

How to Work Out The Cost of a Bridging Loan

First of all, what is a Bridging Loan?

A bridging loan is a short-term loan designed to provide temporary financing for a specific purpose, such as buying a property before selling an existing one. Bridging loans are typically secured against property and can be used for a variety of purposes, including property development, auction purchases, and refinancing.

Bridging loans are often used when a gap in funding is needed and the funds from a sale or longer-term loan are not yet available. They can provide a fast and flexible source of financing and are typically easier to obtain than other types of loans.

Bridging loans have higher interest rates and fees compared to traditional loans, as they are seen as a higher risk. The loan term is usually between 1 to 18 months and the interest is usually rolled up and paid back at the end of the loan term.

To be eligible for a bridging loan, you typically need to have a good credit history and sufficient equity in a property to use as collateral. Lenders will also consider the reason for the loan and the borrower’s exit strategy, as they need to be assured that the loan can be repaid.

In summary, a bridging loan is a short-term loan designed to provide temporary financing for a specific purpose. They are typically secured against property and used when a gap in funding is needed. Bridging loans have higher interest rates and fees compared to traditional loans and are usually easier to obtain. To be eligible for a bridging loan, you need to have a good credit history, sufficient equity in a property and a clear exit strategy.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

The cost of a bridging loan is determined by several factors, including:

Loan amount: The larger the loan amount, the higher the cost.

Loan to value (LTV) ratio: The LTV ratio is the amount of the loan compared to the value of the property being used as collateral. A higher LTV ratio typically means a higher cost for the loan.

Interest rate: Bridging loans typically have higher interest rates than other types of loans and the rate can vary depending on the lender and the loan terms.

Term: The length of the loan term can affect the cost, with shorter terms often resulting in higher interest rates.

Repayment method: Bridging loans can be structured with interest only or capital and interest repayment methods, with the latter typically being more expensive.

Arrangement fees: Lenders often charge arrangement fees to cover the costs of setting up the loan. These fees can add significantly to the overall cost of the loan.

Exit fees: Some lenders may also charge exit fees when the loan is repaid, which can add to the overall cost.

Discover our Bridging Loan services.

To calculate the cost of a bridging loan, you first need to determine the loan amount, interest rate and term. You can then use an online calculator or work with a broker to estimate the monthly repayments based on these factors.

It’s important to remember that bridging loans are typically short-term loans designed to provide temporary financing for a specific purpose, such as purchasing a property before selling an existing one. As such, they often carry higher interest rates and fees than other types of loans and it’s crucial to carefully consider the total cost and repayment terms before proceeding.

In summary, the cost of a bridging loan depends on several factors including the loan amount, LTV ratio, interest rate, term, repayment method, arrangement fees and exit fees. It’s important to carefully consider these factors and to work with a broker or use an online calculator to estimate the total cost of the loan before proceeding.

Source: Bdaily News

Marketing No Comments

Bridging lending hits over £190m in third quarter

Bridging lending has returned to the highest levels seen since 2018, according to data from more than a dozen packagers in the sector.

Gross lending by contributors to the survey hit £190.24m in the third quarter of this year, which is the highest volume recorded since Q4 2018.

Lending was up by 30% on £146.52m the previous quarter and by 65% on £115.52m in Q3 2020.

Contributors attributed the growth to strong housing market activity ahead of the tapering down of the stamp duty holiday.

It represents the highest volume seen since £201.57m in the final quarter of 2018.

The research combines bridging loan completions from several specialist finance packagers.

For the second consecutive quarter the purchase of an investment property was the most popular use for a bridging loan, at 28% of total contributor transactions – up from 24% in Q2.

A traditional chain break was the second most popular use at 13%, a drop from 20% in Q2.

Meanwhile, demand for auction finance surged from 4% in Q2 to 11% in Q3.

First charge bridging loan transactions remained unchanged from the previous quarter, accounting for 90% of total market volume in Q3.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

Regulated bridging loans transacted by contributors decreased market share for the fifth consecutive quarter – falling to 37.7%, from 41.6% in Q2.

The average LTV jumped to 60.2%, up from 54.9% LTV in Q2 – this is the highest average LTV ever recorded since Bridging Trends launched in 2015. This illustrates that borrowers are maximising liquidity opportunities and taking advantage of low rates to leverage more than before.

Demand for higher LTV products was also a sentiment reflected in data provided by Knowledge Bank, which reported the top criteria search made by bridging finance brokers on their system in Q3 was “maximum LTV”.

The average monthly interest rate in Q3 2021 was 0.72%, down from 0.79% in Q2, highlighting the large levels of liquidity in a continually competitive space.

The average term of a bridging loan in Q3 fell from 12 months to 11. Bridging loan processing times returned to Q1’s record high of 53 days, up from 47 days in the previous quarter.

Stephen Burns says: “The most exciting part to read is ‘returns to’ when referring to activity levels.

“It shows the industry was affected by the disruption the Coronavirus pandemic put the country through, but more so, how it has pulled back quickly, and we are now firing on all cylinders.”

Dale Jannels says: “These figures show that bridging finance is now a better understood product for many brokers and they have much more confidence in recommending this solution to their customers.

“The stamp duty holiday has helped bridging finance to be more widely accepted by the mainstream industry as a need to meet speed demands, but investors with the intention to renovate have also been at the forefront of recent requests.”

Chris Whitney says: “Bridging Trends is a great concept and is fantastic at letting the industry know where the key indicators are heading and over the years, we have seen how micro and macro factors, such as Brexit, have impacted upon us.

“However, with the news that contributor gross bridging loans are over £190m it makes me wonder how big this market really is in its entirety.

“LTVs are up with borrowers possibly taking advantage of increasingly cheaper money in the light of reports that mortgage rates in general are heading upwards imminently.

“However, with continuing competition and even more new entrants in the short-term lending space, it will be interesting to see how that pans out with so many lenders looking to increase market share in a seemingly very liquid environment.

“However, at 60% LTV I think we are still seeing prudent levels of borrowing by people and responsible lending from the funders.

“I was not surprised to see processing times up.

“With increased volumes I think we have seen things take longer, with many lenders struggling to recruit good underwriters and valuers stretched to the limit.

“With the highest use of funds being for investment purchase I think it really shows how much confidence people have in UK real estate.”

Chris Oatway says: “It surprises me that the average LTV is at record high levels at just 60%.

“In general, we have seen considerable demand for higher leverage deals at 70% to 75% LTV, where clients keep as much equity in their back pockets for future investments.”

By Leah Milner

Source: Mortgage Finance Gazette

Discover our Bridging Loan services.

Marketing No Comments

Bridging market boom offers opportunities to all brokers

The bridging market has had a really positive 2021 so far. Just like the rest of the housing market, the stamp duty holiday has played a part, but it would be wrong to think activity is going to drop off sharply now the first holiday deadline has passed.

A recent study by Shawbrook Bank polled advisers on which areas of the market were most likely to grow in the second half of the year, with bridging taking top spot having won the votes of more than a quarter (26%) of advisers, ahead of semi-commercial and buy-to-let.

There’s evidently a real expectation amongst advisers that the appetite from investors, who like to take advantage of bridging loans in order to secure those additions to their portfolio quickly, is not going to drop any time soon and is in fact likely to grow.

This market growth presents a real opportunity for everyone in the adviser space, from those specialists who focus on short-term finance to those individuals or firms who perhaps handle only a case or two a year.

Cashing in on competition

Lenders are well aware of the levels of demand from advisers and their clients for quality bridging products. And in a bid to stand out from the crowd, they are taking a fresh look at their product propositions, trying to identify ways to make those products even more attractive to would-be borrowers.

In recent weeks we’ve seen not only new entrants to the market, promising to do things slightly differently, but also a host of rate revisions with some lenders even unveiling their lowest ever rates.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

It’s pretty clear there is real momentum within the bridging market at the moment, with borrowers the ones to benefit from the ongoing battle between lenders who are cutting rates and attempting to innovate regarding their product design.

Taking a personal approach

One area that has been particularly heartening for me has been the way that lenders are approaching cases which are a little out of the ordinary.

It’s one thing to find finance for a vanilla deal, a simple transaction where the client and the property being borrowed against fall comfortably within the criteria of any lender.

Yet recently we have seen a fair few cases which have been anything but vanilla, and not only have we been able to find lenders willing to consider the cases, but they have completed incredibly quickly too.

There is not only a healthy level of competition across the bridging sector as a whole but also plenty of lenders who are willing to take a more personal approach by going through all of the details of an individual case to assess just how happy they may be to take it on.

Finding the right deal

However, finding the right deal for your clients is not always straightforward when bridging is an area of the market you only deal with on an occasional basis.

If you have maybe one or two bridging clients a quarter, or even each year, then it’s simply not realistic to expect to be on top of the latest price and criteria developments, which can mean you don’t follow up on those client enquiries.

It doesn’t have to be that way though. By partnering with a specialist, who you are confident will treat the client with the same level of professionalism that mainstream mortgage advisers pride themselves on, you can ensure that not only the client receives the best possible advice, but also strengthen the relationship you enjoy with that client, boosting the chances of them remaining on your books for the long term.

By Liam Hughes

Source: Mortgage Introducer

Discover our Bridging Loan services.

Marketing No Comments

Bridging loan market steady at £146.5m in second quarter

The bridging loan market has remained stable in the second quarter, rising to £146.5m from £144.5m in the first quarter, with first charge loans making up the majority of lending.

According to quarterly publication Bridging Trends, first charge bridging loan applications made up 90 per cent of market volume, up 12.2 percentage points from the prior quarter.

The report said this was partially motivated by investors and landlords seeking taking advantage of the stamp duty holiday.

The most common reason for using bridging loans was funding a purchase of an investment property, accounting for just under a quarter of contributor transactions, slightly up from Q1.

Traditional chain break was the second most popular use of bridging finance at 20 per cent of transactions, roughly in line with previous quarter.

Regulated refinance dropped to five per cent of contributor transactions, from 13 per cent in the prior quarter.

Regulated bridging loans fell in the second quarter, going from 47.7 per cent to 41.6 per cent.

The report noted that average monthly interest rates marginally increased in Q2 to 0.79 per cent, up from 0.74 per cent in the previous quarter.

Average bridging terms were 12 months with no quarterly change.

The average loan to value levels fell slightly from 55.2 per cent to 54.9 per cent, which the report said implied borrowers were not “overstretching themselves”.

The time taken to process a loan application also fell, with average completion times pegged at 47 days, down from 53 days in the first quarter. This was the lowest recorded timescale for completions since the second quarter of 2019.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

Gareth Lewis said: “As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first charge lending has significantly increased its share of transactional volumes.

“It will be interesting to see if this percentage decreases in the coming months as consumers look to raise finance out of existing properties to fund further property acquisitions or businesses.”

Chris Whitney added: “It looks like we have reached quite a stable platform over the last two quarters. Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity. The higher level of investment purchases shows confidence in the UK property market is strong.

“I am slightly surprised that lending volumes weren’t higher. The market certainly felt very busy as we struggled to get valuers out in a timely manner due to volumes and many a solicitor was having to burn the midnight oil to keep up with demand.”

Stephen Watts said it was encouraging to see completion times had shortened since the last quarter as it suggested lenders were streamlining their processes to include remote valuations.

He added: “Some lenders are now offering AVMs up to 75 per cent loan to value (LTV) in some circumstances and with the ability for asset managers to benefit from modern technology and carry out virtual client meetings, more loan applications are benefitting from these time saving factors.”

By Anna Sagar

Source: Mortgage Solutions

Discover our Bridging Loan services.

Marketing No Comments

Stamp duty holiday fuels bridging activity

Landlords and buyers rushing to complete before the stamp duty holiday started tapering off helped stabilise the bridging market in the second quarter of 2021, according to the latest Bridging Trends data.

Funding an investment purchase was the most popular use of bridging finance whilst the number of first charge bridging loans increased as buyers rushed to complete purchases.

The bridging market held steady in the second quarter at £146.52m, up on the previous quarter (£144.51m), contributors reported. However, regulated bridging loans transacted by contributors dipped in Q2 – falling from 47.7% to 41.6%.

To find out more about how we can assist you with your Bridging Finance requirements, please click here to get in touch

The average completion time on a bridging loan application in the second quarter reduced to 47 days, from a record 53 days in the first quarter. This is the lowest figure recorded since Q2 2019 (44 days).

Chris Whitney said: “It looks like we have reached quite a stable platform over the last two quarters. Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity.

“The higher level of investment purchases shows confidence in the UK property market is strong.

“I am slightly surprised that lending volumes weren’t higher. The market certainly felt very busy as we struggled to get valuers out in a timely manner due to volumes and many a solicitor was having to burn the midnight oil to keep up with demand.

“Nice to see the time it takes to draw a loan heading in the right direction albeit was that again stamp duty deadline linked? It will be interesting to see where that is at in the next quarter.”

Matthew Corker added: “We’ve seen a dramatic rise in searches across our bridging section throughout this quarter. ‘Regulated bridging’ has consistently appeared as one of the most searched terms on our system throughout 2021, holding the top spot in April, May and June, likely due to buyers wanting to secure their onward purchase before the end of the stamp duty holiday.

“Interestingly, we’ve also seen a general rise in search numbers in more traditional bridging categories, suggesting that the usual summer lull may not be as pronounced this year.”

Gareth Lewis concluded: “As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first-charge lending has significantly increased its share of transactional volumes.

“It will be interesting to see if this percentage decreases in the coming months as consumers look to raise finance out of existing properties to fund further property acquisitions or businesses.”

Source: Mortgage Introducer

Discover our Bridging Loan services.

Marketing No Comments

Bridging lending up by nearly 20% in 2019

Bridging loan books grew to £4.5 billion in 2019, an increase of 19.7% compared to 2018, according to figures compiled by auditors from data provided by members of the Association of Short-Term Lenders (ASTL).

Completions in Q4 2019 reached £1.068 billion – an increase of 13.7% on Q3, while average LTVs continued to remain below 60%.

However, applications in the final quarter of 2019 fell by 10.7% on the record-breaking previous quarter.

The value of loans in default grew by 13.2% in Q4 2019 from the previous quarter.

Vic Jannels, CEO of the ASTL, commented: “The value of outstanding bridging loan books jumped significantly last year driven by both an increase in new business and a trend for borrowers to take bridging finance over longer terms.

“We did see a fall in applications in the final quarter of 2019 compared to the record breaking Q3, but in the context of both a December General Election and Christmas, this is perhaps unsurprising.

“There is, however, reason to be cautious. The value of loans in default has continued to rise, and there is some evidence that repossessions are also increasing, so it is important that lenders maintain responsible underwriting and collections practices alongside their appetite to continue to grow their lending.”

By Joanne Atkin

Source: Mortgage Finance Gazette

Marketing No Comments

Bridging lending breaks new records in Q2 2019

Bridging loan books grew to a record £4.62 billion at the end of the second quarter of this year, according to the Association of Short-Term Lenders (ASTL).

This represents growth of 11.7% compared to the first quarter of the year and an increase of 14.4% on the same quarter in 2018.

Bridging loan applications also hit a record total in the 12 months preceding the end of Q2 2019, with £22.13 billion of applications representing a 9.7% increase on the same period the previous year.

The figures were compiled by auditors from data provided by members of ASTL, which confirmed that more than £1 billion of bridging loans were written in the second quarter of this year, an increase of 11.8% on the previous quarter and a rise of 4.1% on the same period last year.

There were £5.69 billion of bridging loan applications in Q2 2019, which is 4% lower than the first quarter of the year but 5.3% more than the same period in 2018.

Benson Hersch, CEO of the ASTL, said: “The second quarter of this year has delivered some very strong results for bridging lending, with record values both for applications over a 12-month period and total outstanding loan books. In fact, nearly all measures were higher than last quarter and the same period in 2018.

“The wider political and economic environment remains uncertain and the challenge for the industry now is to continue this level of activity whilst maintaining high standards of underwriting and customer focus.”

By Joanne Atkin

Source: Mortgage Finance Gazette

Marketing No Comments

Bridging Loans – Why You Need Them, When You Need Them & How To Apply For One

When utilised properly, bridging loans are among the most effective commercial finance products. We try to answer a few burning questions about such loans in this post.

If you operate in the property market, you already know that time is of utmost importance. A good deal can become unreasonably expensive if you can’t close it in time. Worse yet, someone else is almost always ready to swoop in and steal the deal from you.

In short, if you can’t move at a rapid pace, you’ll only make things difficult for you.

But then again, it’s never easy to get property deals worth hundreds of thousands of pounds through without having some time to think, consult with people and arrange for funds. The last part – that of raising money – eventually turns out to be the bottleneck.

Breaking that bottleneck so that investors, developers, landlords and regular buyers can ‘realise’ their dream deals is the prime focus of all bridging finance products.

Before We Start – A Quick Look At What Bridging Finance Really Means

There are quite a few myths that regularly float around bridging loans, especially amongst first-time borrowers. For now, we will just try to clear the air by defining what bridging loans are.

What Are Bridging Loans?

Bridging loans are short-term loans taken (usually) by commercial entities to help ‘bridge’ the gap between required funding and available (or soon to be available) funding.

It’s common for people in the property market to use the terms ‘bridging loans’ and ‘short-term loans’ interchangeably – but that’s not always correct. An easier way to differentiate between the two is this: all bridging loans are short-term loans, but not all short-term loans are bridging loans.

Example

Let’s say you are a property developer. You already have an active project that’s nearing completion. You expect it to complete within next 10 months. For now, you’ve come across a good buy to let opportunity that you don’t want to miss out on. The only problem is, the seller wants you to make an initial deposit of £200,000. You already have active development finance on your project, so you know it’ll be tough to get a buy to let loan.

In this case, a bridging loan can be the most ideal way out. You can, for instance, take a six-month bridging loan with a fixed interest rate. This loan will cover the initial deposit for your new project – and can be paid back once the active project gets completed (i.e. your exit strategy will hinge on the competition of your active project).

Here’s how the numbers would typically work out for such a case:

  • The market value of the property to be used as security: £400,000
  • Maximum LTV offered by the lender: 80%
  • Maximum amount that can be borrowed: £320,000
  • Actual amount borrowed: £250,000
  • Initial deposit to be made: £50,000
  • Balance bridging loan amount: £200,000
  • Applicable interest rate:5% per month
  • Loan term: 12 months
  • Payable interest: £1,250 per month

Why Are Bridging Loans Used? Who Are They Aimed At?

There’s really no limit to the number of reasons people and businesses use bridging loans for.

Even though, at Commercial Finance Network, our bridging finance services focus on the property market, it’s important to note that bridging loans are used across all industries and sectors. They may take different names and forms, but the idea remains the same.

Bridging loans are aimed at people who are looking to enter the property market via any of the regular channels (buy to let, convert, develop or invest). Essentially, if you are a property developer, landlord or investor, you can and should use bridging loans as a viable financing option.

Here’s Why Bridging Loans Are Popular

  • Easy To Get: Bridging loans are easier to get if you have your business and personal credit history in good health. Even when you don’t, lenders on our panel might be interested in your application. You can get a loan for an amount as high as £200,000.
  • Fast: There’s no need to waste time. When you work with an industry-leading whole of market broker like Commercial Finance Network, you get a decision on your bridging loan application within 24 hours. More importantly, we make sure that the lender releases the funds to you swiftly.
  • Flexible: Bridging finance is incredibly flexible. It’s just a short-term loan, but can well be extended up to 12 months, should you feel the need to. Moreover, most lenders are willing to offer interest-only repayments (subject to the viability of your exit strategy).
  • Cheap: Bridging loans we broker come with lower-than-market interest rates. Some of our lenders offer interest rates as low as 4% per month. It should, however, be noted that bridging finance is more expensive than long-term mortgages.

When Should You Consider Applying For A Bridging Loan?

Bridging loans are a specialty commercial finance product. Therefore, to make the most of what they have to offer, you need to know and understand when they are a good option.

Here are some common scenarios that are tailor-made for bridging loans:

Buy To Let Projects

Buy to let projects are well served by bridging loans – especially when your existent credit line/loan is fully invested in another active project.

Residential/Commercial/Mixed Use Development

Development projects, more often than not, end up stretching your budget too thin. There are a million fronts to fight on, and it’s not at all uncommon for developers to run out of money. Such situations – before the project starts or is already in progress – can be taken care of using a customised bridging loan.

Conversions/Refurbishment Projects

If you want to undertake conversion/refurbishment projects, you can take out a bridging loan to cover the costs.

Important: Know What Your Exit Strategy Is!

Bridging loans are incredibly useful when your back is against the wall. That, however, doesn’t mean that they can replace conventional, long-term financing options.

A bridging loan is best viewed as a temporary arrangement – one that saves the day.

Therefore, before you get into a bridging loan contract, it’s important for you to know how you’re going to exit. Common exit strategies include:

  1. Selling the property (being used as security)
  2. Getting a more robust, long-term development finance package or buy to let loan
  3. Placing a mortgage on your new property

Bridging Loans Timeline

A traditional mortgage would take weeks to ‘realise’. Bridging loans, thankfully, are faster.

When you work with us, we make sure that you get a decision from lenders within 24 hours. Once you decide to go ahead with a particular quote, the lender will proceed with the valuation of your property and assessment of your credit file. Everything said and done, a commercial bridging loan can go through within a matter of days.

Finally, How To Apply For A Bridging Loan?

If you don’t want to involve a broker in the process, you can approach lenders directly. This, however, is an approach fraught with risks. When you aren’t familiar with the lender’s approval criteria, you always have a very high chance of getting multiple applications turned down. This puts a dent in your credit score, making it even more difficult for you to get approved.

Such hassle can be avoided with ease, and for a very reasonable cost by working with a leading whole of market broker like Commercial Finance Network. We have on board a panel of UK-wide specialist lenders who are known to offer low interest rates and high flexibility of repayment.

Applying for a bridging loan is easy – just complete this form or call us on 03303 112 646 to get started.

Marketing No Comments

Bridging loan figures suffer slight fall but outlook is positive

Bridging lending has fallen slightly during the first quarter of the year but strong competition and signs of average loan size increases indicate a market which is on an ‘upward trajectory’.

That’s according to the latest figures from West One which has released its Bridging Index showing gross annual bridging lending reached £5.5 billion in Q1 2019.

This was a slight decrease of 2.6% on the previous quarter, which yielded a high of £5.7 billion. But West One said it was always going to be challenging to maintain this powerful growth trajectory.

What’s more, according to its estimates, the average loan size increased by 11% through the quarter, compared to Q4 2018, which was the highest performing quarter of last year.

Trends: ‘Bridge-to-let’

As well as releasing lending figures, the West One Bridging Index also analysed trends within the market. It said competition had been maintained thanks, in part, to the wealth of new bridging products to enter the market.

New ‘development exit’ loans to help builders transition from repaying their development facility to obtain the sales values they want to achieve have been created.

But West One said it had also noticed increasing demand for ‘bridge-to-let’ products, which enable landlords hit by tax relief changes and affordability stress tests to bring derelict properties up to scratch to add to their portfolios.

Interest rates

West One’s data also revealed bridging finance interest rates had fallen to their lowest levels, with a Q1 average of 0.95% per month.

Factors contributing to this included a stable Bank of England base rate, strong market competition and the continued interest from new entrants combined with well-funded players maintaining attractive rates.

West One said the fall in rates was also driven by the increase in regulated bridging that was priced at a lower rate of interest. This, it explained, had meant good value for borrowers, resulting in the continuing interest and performance of the sector.

Stephen Wasserman, managing director, West One Loans: “At West One, we’ve seen robust growth in our bridging service this year, which includes completing one of our largest loans.

He added: “It is positive to see the average loan size increase, too. With the ASTL reporting a record number of applications among their membership, it’s clear that bridging finance is still very much on an upward trajectory.”

By Kate Saines

Source: Mortgage Finance Gazette