The UK bridging finance market continued to show resilience in the second quarter of 2025, with falling interest rates, growing application volumes, and stable lending activity.
According to the latest Bridging Trends data, the average monthly interest rate for bridging loans fell to 0.81% in Q2, down from 0.86% in the previous quarter. The decline, attributed to falling base and swap rates alongside a lower weighted average loan-to-value, reflects the continued competitiveness of the sector and an improved cost of capital environment for borrowers.
At the same time, application volumes climbed 11% year-on-year, rising from 415 in Q2 2024 to 460 this year. Quarter-on-quarter growth was more modest at 2%, but the figures suggest a steady level of demand and growing confidence among brokers and borrowers in the use of short-term finance.
Q2 GROSS LENDING
Gross lending remained broadly stable at £199.7 million, representing just a 1% dip on both the previous quarter and the same period a year earlier. First charge lending accounted for 10% of transactions, with second charge loans making up the remaining 90%. The average loan-to-value ratio held firm at 54%, and the average loan term remained unchanged at 12 months – both indicators of sustained discipline in underwriting and risk appetite.
One of the most notable shifts in activity came from the refinance segment. Regulated refinance volumes rose by 76%, from 46 in Q1 to 81 in Q2, while unregulated refinance increased by 63% to 49 loans. Regulated refinance now accounts for 18% of all loans, up from 10% in the previous quarter, making it the largest category by purpose.
Auction purchases also saw a modest uptick, growing from 12% to 13% of market share, indicating continued investor interest in short-term finance for time-sensitive opportunities.
Search data from Knowledge Bank showed development bridging and development finance as the top criteria searched by UK brokers during the quarter, suggesting further momentum behind refurbishment and construction-focused projects.
Gareth Lewis, deputy chief executive at MT Finance, said the figures point to a resilient market that continues to adapt to prevailing conditions. “The reduction in interest rates combined with consistent application volumes suggests a healthy appetite for bridging finance,” he said.
“We are also seeing a clear shift in loan purposes, with refinance and auction purchases playing an increasingly significant role. We expect continued sector stability and favourable market conditions throughout 2025 as lenders continue to improve operational efficiency on all fronts.”
Chris Whitney, head of specialist lending at Enness Global, described the data as evidence of a maturing sector. “Borrowers are increasingly using bridging finance as a proactive solution rather than a reactive one,” he said, “utilising it as a tool to meet complex and time-sensitive requirements such as auction purchases. With interest rates edging down and application volumes growing, the sector is clearly demonstrating both adaptability and continued relevance in a changing financial landscape.”
Dale Jannels, managing director at Impact Specialist Finance, noted the growing awareness of bridging solutions among intermediaries. “We’re seeing several new brokers placing clients in the bridging market,” he said.
“Every day is a learning day, but now more brokers are exploring and educating themselves on the many benefits that bridging can bring to their client banks.
“I’m not surprised volumes have remained resilient, and I see this only increasing in the latter part of the year as the market demands more solutions away from the high street.”
