The figure is the highest for gross lending since the Bridging Trends report (which is published by lender MTF and a host of specialist finance brokers) was launched.
According to the report refurbishment was the most popular reason for taking out a bridging loan, accounting for 27% of all lending. It was followed by mortgage delays at 25% and this is the first time since the first quarter of 2015 that delays have not been the main reason for obtaining a bridging loan.
Kit Thompson, director of short-term lending and development at Brightstar – one of the brokers that contributes to the report – said the refurbishment side of the market was benefitting from the sheer number of lenders now willing to lend on these projects.
He said: “There was a time when some lenders didn’t get involved with refurbishment, but almost all of them lend on these projects now.
“There’s plenty of demand there, the rates have come down a lot and the number of lenders around has increased hugely. You can almost take your pick of lenders; almost everyone will have some form of refurbishment proposition available.”
Joshua Elash, director of MTF, added: “While it is too early to form any conclusions [about refurbishment becoming the most popular reason for a bridging loan], this may be indicative of a shift in the market, coming off the back of recent increases in stamp duties, and the changes to tax relief on buy to let property.
“More investors in this quarter are focused on adding value to their existing investment properties,” he added.
The report also revealed that average loan-to-values have dropped to a new low of 45.4% during the quarter, a factor MTF suggested may reflect buyers and lenders taking a more conservative approach.
However, Brightstar’s Thompson argued this was likely more down to regulated cases of older people downsizing, where the charge is secured across both their old property and the new one.
He added: “If anything, lenders have more money and appetite to lend than ever. We are trialling an 80% product at the moment with Together, so some lenders are looking to increase the LTVs on offer.
“With the investor looking for gearing, their first question is normally what’s the lowest amount they can put in.”