Bridging lending falls marginally

Annual gross bridging lending dropped slightly in the first quarter of the year, according to the latest Bridging Trends data.

The figures show that contributor gross lending fell by 5.5% in Q1 2017 to hit £118.79m, down from £125.7m in the final quarter of last year.

The data also shows that lending is down by 5.2% from the £125.4m recorded during the corresponding period last year.

Michael Perry, bridging finance broker at Enness Private Clients, said: “Q1 2017 appears to have experienced somewhat of a hangover from the financial uncertainty of 2016, with gross lending down to £118.79m from £125.62m since Q4 2016.

“Additionally, we have seen average monthly interest rates rise from 0.78% to 0.83%, despite the lowest ever headline rates being offered.”

Bridging Trends is a quarterly publication conducted by bridging lender MTF, and specialist finance brokers Brightstar Financial, Enness Private Clients, Positive Lending, and SPF Short Term Finance, designed to monitor the general trends in the bridging finance market.

Regulated bridging loans outperformed unregulated bridging loans for the first time since Bridging Trends was launched two years ago, with the volume of regulated loans transacted by contributors up from 37.3% in Q4 2016 to 50.7% in Q1 2017.

According to the research, the main reason for the use of a bridging loan in Q1 2017 was mortgage delays at 31% of all lending, falling from 35% during Q4 2016.

Refurbishment was again the second most popular reason for getting a bridging loan contributing to 23% of all lending.

Kit Thompson, director of Brightstar Financial, commented: “The delays seem to be twofold; a lack of urgency on the borrower’s part to complete in a hurry and continued delays with legals where borrower’s solicitors tend to drag their heels and take too long to deal with the legals. This seems to be an industry wide issue and one we are trying to address it by offering a panel of experienced bridging lawyers to borrowers, which we help will reduce the average completion times.”

First charge lending for the quarter rose to 86.6%, from 82.6% during Q4 2016, while second charge transactions dropped slightly from 17.4% in the previous quarter, to 13.4%.

Average loan-to-value levels fell to 46.2% in Q1 2017 whilst the average monthly interest rates were up to 0.83%, representing an increase of 0.05% on the previous quarter.

“Whilst the level of regulated activity is up it is interesting to see rates increase for the first time in 5 reporting cycles,” said Joshua Elash, director of bridging finance lender MTF.