Bridging loan activity increases by 54%

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The bridging loans arranged in the third quarter of 2016 came to a total of £140.49m, which is 54% higher than the second quarter amount of £91.11m. It is also 6.6% higher than Q3 of 2015, reported in October 2016.

The statistics were published in the report ‘Bridging Trends’ by lender MTF. The figures show that investors are looking for quick short-term finance to take advantage of investment opportunities. The report says that 30% of bridging loans were required because of mortgage delays. Bridging loans for refurbishments accounted for 23% of bridging loans, and 20% were for businesses needing to access short-term finance.

The average monthly interest rates on bridging loans was 0.85% in the third quarter of 2016, which is a decrease from 0.88% in the first quarter.

The majority of loans continue to be unregulated, though there has been a rise in regulated loans which currently represent 49.2% of bridging lending. The Mortgage Credit Directive, introduced in March 2016, provided a set of rules for buy-to-let lending, and this has contributed to the rise of regulated bridging loans.

The financial markets have been volatile following Brexit, but the Bridging Trends report shows that the bridging loan sector remains buoyant.

The average loan to value level for bridging loans secured on property decreased to 46.9% in the third quarter, which has increased from 47.4% in the second quarter.

Many financial companies offer bridging loans for property and commercial purposes. Mortgage brokers have access to a wide range of bridging loans.

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