The average completion time for a bridging loan fell from 52 days in Q2 to 46 days in Q3, the fastest it has been since Q2 2019, an industry report found.
The MT Finance Bridging Trends Report for Q3 suggested efficiency across the market had improved as gross lending increased 9% since Q2 to £220.8m.
The report showed that most of the loans taken out in the quarter were for investment purchases, rising from a share of 18% in Q2 to 24% in Q3.
Chris Oatway, chief executive of LDN Finance, said: “Over the past quarter, we’ve seen a notable improvement in the bridging finance sector, with the average completion time reducing significantly, signalling a more efficient market all round. Additionally, lending volumes have increased by 10%, with a marked rise in investors using bridging finance for new acquisitions. With bridging finance usage rising, particularly among investors looking to seize new opportunities, there’s a growing sense of optimism.
“Looking ahead to Q4 2024, we expect continued momentum, with further growth in lending activity as confidence in the market strengthens. With the easing of economic pressures and a stable property environment, we anticipate more investors leveraging bridging finance to secure profitable opportunities, suggesting that the market will continue to improve as we close out the year.”
Gareth Lewis, managing director of MT Finance, said: “The reduction in completion times to a five-year low demonstrates a considered approach from all facets of the market to improve operational efficiency. This is particularly noteworthy given that we typically see the market soften slightly during the summer months.
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“Instead, we’ve witnessed increased lending volumes and faster turnaround times, indicating a more streamlined process from all parties involved in the bridging transaction chain.”
Lewis added: “The rise in investment purchases to 24% of total lending suggests growing confidence among property investors, who are actively seeking opportunities in the current market. These figures paint a picture of a robust and efficient bridging finance sector that continues to meet the evolving needs of borrowers.”
Rise in bridging demand
Demand for regulated and unregulated bridging finance saw the biggest increase, rising from a share of 6% of business to 14% and from 6% to 13% respectively. Further, a drop in chain-break loans pointed to a more stable housing market with less disruption in the transaction process.
This was alongside data supplied by Knowledge Bank, which showed regulated bridging was the top criteria search made by bridging finance brokers in Q3.
The proportion of first charge bridging loans increased from 88.4% to 91%, while second charge loans fell by 8% to 11.6%. The average loan to value (LTV) also fell from 59.3% to 56.8% quarter-on-quarter.
Meanwhile, the average term remained at 12 months for the 12th consecutive quarter.
Shane Chawatama, sales director at Knowledge Bank, said: “Over the last quarter, bridging demand has remained exceptionally popular. The top three searches on Knowledge Bank continue the trend we have seen this year. Regulated bridging, minimum loan amount, and maximum LTV have held steady. While these three criteria continue to dominate, we’ve also seen increased interest in second charge bridging and adverse credit, underscoring the market’s focus on flexible bridging options, amid the ongoing economic uncertainty [that] continues for customers.
“Bridging searches have grown consistently over the past two years, and with housing stock challenges remaining in the residential market, we expect demand for creative funding solutions in property improvements and value-adding projects to stay high.”
The Bridging Trends Report combines bridging loan completions from specialist finance packagers including AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Finance and UK Property Finance.
