Investor demand rising in bridging market

Investor demand is increasing in the bridging market, according to research by MT Finance.

The lender’s latest Bridging Trends data shows that for the second consecutive quarter the most popular use of a bridging loan was to purchase an investment property, equating to 25 per cent of all lending in Q2 2019.

This figure increased from 22 per cent seen in Q1 of this year.

Breaking a property chain was the second most popular use of a bridging loan for 18 per cent of cases.

The use of bridging loans for business purposes rose from 8 per cent of all loans in Q1 2019 to 12 per cent in Q2.

Looking at bridging loan volumes, the total figure fell by £500,000 to £184.8m between Q1 and Q2.

Within the same time frame the average LTV in this sector rose by 1.55 per cent to 52.8 per cent and the average monthly interest rate also increase by five basis points to 0.79 per cent.

From the first quarter of the year to the second the number of regulated loan transactions fell from 38.3 per cent to 37.5 per cent.

However, second charge loan transactions increased between Q1 and Q2, from 18.3 per cent to 18.7 per cent.

The average term of a bridging loan remained at 12 months for the third consecutive month and the average time taken to complete the application process rose by four days to 44, the research shows.

The data is calculated by collecting information from MT Finance, Brightstar Financial, Clever Lending, Complete FS, Enness, Impact Specialist Finance, Positive Lending, Pure Commercial Finance, Y3S, and UK Property Finance.

MT Finance commercial director Gareth Lewis says: “Now that Boris Johnson has been announced as the new PM and has made Brexit top of his to-do list, this should help give the market the certainty it needs.

“If the rumours of a stamp duty overhaul are true- we expect the change to ease the pressures of regulation and excessive taxation on UK property investors.”

Impact Specialist Finance managing director Dale Jannels adds: “I am not surprised that chain break finance was the second most popular reason for obtaining bridging finance in the last quarter. We are in uncertain times and this uncertainty transfers into property transactions.

“Customers are also being gazumped and looking for short-term finance assistance to speed up the purchase of their dream property.

“Add in the complexity of many property transactions and the high-street lender will say no, yet short-term finance might get them over the initial line.”

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