The second quarter of 2015 saw UK bridging lending activity increase, as uncertainty over the general election led to delays in lending decisions from the residential mortgage market, according to the Bridging Trends survey.
Bridging Trends is a quarterly publication which aims to offer a general snapshot of this industry, with data gathered from bridging finance lender, MTF and packagers Brightstar Financial, Enness Private Clients, Positive Lending and SPF Short Term Finance (SPF).
Q2 saw a significant uplift in bridging loan applications for mortgage delays – increasing from 8% in Q1 to 33% in Q2 and reflecting the uncertainty from the mortgage market in the run-up to the election.
Bridging Trends contributors also reported an increase in lending volumes in the second quarter, which climbed to just under £100 million, from £80.47m in the previous quarter, demonstrating the strong demand for bridging finance.
The rise in applications for mortgage delays appears to have influenced the regulated side of the bridging sector, with the number of regulated loans increasing by 15%. This activity translated into lower monthly interest rates and LTVs, but longer turnaround times.
Refurbishment was the second best performing area of the industry, while bridging loans for businesses fell to 16%, from 24% in the first quarter.
Key data points from Bridging Trends in the second quarter of 2015 are as follows:
- Total contributor lending reached £99.11m, an increase of 23%
- Average term remains at 11 months
- Average monthly interest rate drops to 0.91%
- Average LTV was 45.9%
- Mortgage delays were most popular use for bridging loans
- 47% of bridging loans were regulated. An increase from 32% on the previous quarter
Joshua Elash, director at MTF, said: “The latest data is interesting and suggests that the short term lending market is regularly shifting.
“Bridging Trends, which offers a general snapshot of the market, is still however at an embryonic stage and we will need to collate more data over several quarters before we can confidently look to identify any emerging or consistent trends.”
Kit Thompson, director of bridging at Brightstar Financial, added: “It is really pleasing to see lending up by almost £20m for Q2 vs. Q1, which indicates the bridging sector is still in very rude health and there is continued demand for bridging finance as the sector continues to grow.
“The real stand-out stat for me this month is the average deal time of 39 days to complete a loan, up from 34 days in Q1.For me this is as a direct result of delays with surveyors (trying to keep up with demand) and legals. Those lenders, who can deliver quickly and with minimal fuss, are those best fit to take market-share.
“It’s not all about rate. The key-driving factor has historically been speed and 39 days to complete a bridging loan is not a stat I am particularly proud of. As an industry, we can and should do better.”
