Demand for bridging loans continues to rise

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The latest figures from MTFdata found that over 75% of brokers experienced an increase in the number of bridging loan applications in 2016.

Around 69% of brokers predict that in 2017, their bridging loan business will rise further. None of them forecasted that the level of bringing loans would fall. The South East of England saw the biggest rise in bridging loans in the last quarter of 2016.

The figures also revealed that 31% of bridging loans were for property refurbishments, and 15% for building development projects.

There are stricter affordability tests for commercial mortgage applications for buy to let property. Many applicants have been refused mortgages under the new regulations. It was noted that 69% of brokers said that some of their clients had been helped with bridging loans after being refused a commercial mortgage.

Brokers are uncertain about the economic outlook in 2017. When asked, 38% of brokers said that they were not sure if the economic conditions will improve in 2017. Around 66% of brokers said that the state of the UK economy was their greatest concern, with property prices being the next largest issue.

The director of MTF, Tomer Aboody, summarised the findings:

“The results from our Q4 survey reflect the adverse impact of stricter affordability and stress testing from mainstream lenders on professional property investors’ ability to obtain buy to let mortgages.

“Despite uncertainty in the wider markets, we expect strong demand for bridging loans to continue in 2017.”

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