Bridging loans increase dramatically in last quarter

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Bricks-and-Money

The Association of Short term lenders has announced that bridging loans increased by 61.5% in the quarter April – June 2016 compared to the previous quarter.

A data survey by the Association of Short Term Lenders asked 36 short term and bridging loan lenders about their business activities. The loan application value was £3.5 billion. which was a 61% increases on the previous quarter. Bridging loans have increased 17% this year compared to 2015.

The figures demonstrate that the financial uncertainty following the leave vote in the June EU referendum, has not affected the bridging loan market.

Benson Hersch of the Association of Short Term Lenders noted:

“Bridging finance shrugged off pre-referendum doubts with a brilliant performance in Q2 2016.”

He recognised that recent press reports on the economy have been more negative than positive. He said that short term lenders were positive about the bridging loan market, but concerned about the general economic climate in Britain. Hersch commented:

“In my opinion the need for bridging finance is likely to continue to grow, especially if other finance providers tighten criteria.”

The Prudential Regulation Authority is considering tightening up the assessment rules for loans in the buy to let market to reduce the risks to lenders. This could make it more difficult to obtain buy to let loans. The effect of this could be a surge in demand for both commercial mortgages and bridging loans by buy-to-let landlords before the anticipated tougher legislation.

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