According to the MTF Broker Sentiment Survey, one third of the 122 specialist brokers quizzed said funding development projects was the most popular reason for completing a bridging loan in the second quarter of the year.
This was up from 24% during the same period of 2017.
Refurbishment was the second most popular reason for getting a bridging loan at 27%, compared to 19% during the second quarter of 2017.
MTF found that overall demand for bridging finance increased in the second quarter, with 38% of brokers noticing a rise in bridging loan volume, up from 30% in the first quarter of 2018.
The biggest demand for bridging loans in Q2 2018 came from the South East, followed by the midlands.
Some 26% of respondents said buy-to-let lending restrictions were the biggest challenge facing UK finance brokers, while 24% said it was the government’s continued changes to buy-to-let legislation.
Substantial rise to continue
MTF commercial director Gareth Lewis noted that with mainstream lenders implementing tougher affordability restrictions, it had been harder for investors to access funds.
As a result, broker feedback suggested more were turning to bridging finance.
“In particular, investors are looking to add value to a property rather than purchase a property as a straight forward portfolio investment,” he said.
“This trend is evidently not just limited to light and decorative refurbishment, but also property conversion, extensions, reconfiguration and smaller scale ground up developments.
“We believe we will continue to see a substantial rise in the demand for development and refurbishment products throughout the rest of the year,” Lewis added.