Total gross bridging lending came to £196.2m in the first quarter of this year, a rise on £195.5m in the prior quarter but down on the same period last year.
According to Bridging Trends data, the total amount of gross lending for bridging was estimated at £278.8m in the first quarter of last year.
The latest data for Q1 2024 found that most were using bridging loans for investment purchase at 21%, a slight fall on 24% in the prior quarter.
This was followed by chain break at 19% and business purposes at 15%. The latter experienced the largest growth from the prior quarter, nearly doubling from 8%.
The report found that 51% of transactions were for regulated bridging, an increase from around 44% in the prior quarter, with the remainder coming from unregulated bridging.
Bridging Trends said that conveyancing delays leading to “protracted home purchase transactions” and more broken chains could have led to more regulated bridging transactions.
The average loan to value (LTV) stayed stable at 60% compared to the prior quarter.
The average monthly interest rate is 0.89%, a slight fall on Q4 2023’s 0.91%, which was attributed to the growth in regulated bridging.
Around 79% of transactions were first charge, but second charge hit a three-year high of 21%. This was explained by more borrowers turning to bridging to leverage equity in their assets in Q1 2024.
The average term was 12 months for the 10th consecutive quarter.
Bridging sector resilient and versatile
William Lloyd-Hayward, group chief operating officer and managing director at Sirius Finance, said that the latest figures were “yet another reminder of the resilience and versatility of the bridging sector”.
He continued: “Overall lending continues to grow, and the diversity of this growth is striking. Demand from businesses for short-term property funding, for example, has doubled, while homeowners are increasingly turning to bridging, with the regulated part of the market jumping to pre-pandemic levels. At the same time, second charge bridging loans have hit a three-year high.
“The overall picture demonstrates that more brokers and borrowers are recognising bridging as a flexible solution to meet a wide variety of capital challenges – and this is a positive sign for the future growth of the sector.”
Chris Whitney, head of specialist lending at Enness Global, said that the rise in loans for business purposes was not a surprise.
“With lenders tightening criteria, unsecured business loans are much harder to get this year. They are also taking much longer to implement and are more expensive – I was recently shown one example at 22% per annum. Therefore, it makes sense for business owners looking to support their business to take a second charge loan on a property.
“Additionally, entrepreneurs are finding that when they are coming to renew their facilities, they no longer meet the stricter criteria and are forced to refinance using a different method. We expect this sector to become even more restrictive before it gets better – I think we will see this trend continue as we move through the year,” he added.
Whitney said that investment purchases being the main reason for taking out a bridging loan is a “positive indicator for the economy, possibly fuelled by the expectation of interest rate falls this year”.
He continued: “It is good to see re-bridges come down, indicating borrowers are choosing a sensible term. The cost of funds also going down makes bridging loans an ongoing cost-effective way of funding in a relatively high-interest-rate environment. Seemingly, speed is becoming less important to many, at 58 days, which I would like to see come down in the next quarter.”
Gareth Lewis, managing director at MT Finance, added that “it’s clear that borrowers are continuing to turn to bridging lenders thanks to the certainty, speed, and flexibility we are offering them”.
He continued: “Second charge bridges in particular have come to the forefront and show how brokers are working with their clients to maximise the equity in their properties without disturbing their current mortgages. I would not be surprised if this jump in second charges is also linked to the rise in regulated bridging, allowing homeowners to take out a cross charge and secure their dream home.
“What happens in the next quarter in the run-up to the election is hard to guess, but regardless of what happens, I know I speak for everyone in the specialist finance industry when I say we remain committed to our clients and delivering the best outcome as quickly as possible.”
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
