£214.7 million in bridging loans was transacted by Bridging Trends contributors during the third quarter of 2022.
This was the third consecutive quarterly increase and a 20% rise on Q2 (£178.4m), making it the highest contributor lending amount since Bridging Trends launched in 2015.
Preventing a chain break became the most popular use of a bridging loan in Q3 at 22% of total transactions, up from 21% in Q2.
Purchasing an investment property – previously the most popular use of bridging finance for the five previous quarters – dropped by a third, from 24 to 16%. This is an all-time low and could be due to investors exercising caution amid an unpredictable economic climate, the contributors said.
Meanwhile, bridging loans for business purposes nearly doubled, soaring from 6% in Q2 to 11% in Q3. Auction finance also saw a jump in demand, rising from 5% in Q2 to 8% in Q3.
The average monthly interest rate increased for the first time this year to 0.73% in Q3, up from the record low reported in the previous quarter (0.69%) as the cost of borrowing increased across the financial services industry.
The average loan-to-value level also increased in Q3 – to 59.6%, up from 56.2% in Q2.
Regulated bridging remained in high demand, taking 45.2% of market share, up from 43.3% in Q2. This is the highest percentage in regulated bridging transactions since Q1 2021.
Pressure on industry professionals continued into Q3 as demand soared – highlighted by the average completion time increasing to 60 days in Q3, from 57 days in the previous quarter.
Sam O’Neill, head of bridging, Clifton Private Finance, said: “The total gross lending figure will be an interesting benchmark for the next quarter given the current uncertainty of the market. With uncertainty comes opportunity, and we are already seeing investors looking to capitalise on under market value transactions caused by panic-selling vendors.
“I anticipate investment purchases to increase in the next few months. I would be interested to see the re-bridging figure in the next quarter’s statistics. Current bridging loans nearing their term’s end are subject to more stringent criteria on mortgages and an uncertain buying/selling market.
“Will more lenders who don’t currently consider re-bridging see this as an opportunity? Or a necessity to keep pace with other lenders and the demands of the market?”
