Bridging lending rises as landlords buy investment property
Almost £182million was lent by contributors to the Bridging Trends index in the three months to September.
Buying an investment property has become the most common use of bridging finance, it has been revealed.
Investment purchases accounted for 23% of bridging transactions in the three months from July to September, up from 18% in the previous quarter.
The data is from Bridging Trends, the quarterly index compiled by MT Finance from completions by specialist finance packagers.
Contributors lent £181.8million during that quarter, up 5% on the £173.1million lent during the previous quarter.
However, it is still 13.2% below the £209.4million of a year earlier.
Unregulated lending rose to 55% of the total, from 52% in the second quarter.
Interest rates
The average monthly interest rate fell to 0.77%, down from 0.81% and the fourth consecutive quarterly fall.
Average completion times dropped by five days to 41, while the average term stayed at 12 months.
Meanwhile, the average loan-to-value increased from 55% to 59%.
MT Finance suggests this reflects how applicants were able to borrow more while keeping costs “manageable”.
The bridging market appears to be moving towards more investment-led, first-charge lending.”
First-charge bridges rose from 78% of lending to 87%, with second charges falling from 22% to 13%.
Heavy refurbishment bridges fell from 10% to 6% as building costs stayed high.
Fergus Allen, head of bridging at Clifton Private Finance, says: “The bridging market appears to be moving towards more investment-led, first-charge lending, with borrowers benefiting from increasingly competitive rates and higher leverage.
“At the same time, lenders appear to be completing transactions more quickly. Whether this is due to sustainable market growth or increased competition between lenders is up for debate – my opinion is it’s most likely the latter.”
Raphael Benggio, bridging director of MT Finance, says: “It is really encouraging to see the drop in both completion times and interest rates.
“This shows that despite the geopolitical landscape, lenders are continuing to support borrowers which helps to drive much-needed momentum.”
