Regulated bridging lending hits lowest level since 2015 – MTF

Data from the MTF Bridging Trends showed that this figure hit the lowest level since Q1 2015.

Bridging loan volume transacted by contributors hit £213.35m in Q3 2018, an increase of £15.4m on the previous quarter.

This is the highest figure to date and comes after Clever Lending joined Bridging Trends as a new contributor.

First legal charge lending rose to 84% of all loans during Q3 2018, up from 81% in Q2 2018. Meanwhile, second charge loans decreased to 16% compared to 19% during Q2 2018.

For the second consecutive quarter, refurbishment purposes were the most popular reason for obtaining a bridging loan, as borrowers continued to add value to existing and newly purchased properties.

Mortgage delays were the second most popular reason for obtaining a bridging loan, accounting for 19% of all lending, down from 20% in the previous quarter. Whilst loans for auction purchases and business purposes increased in the third quarter by 3% and 1% respectively.

Drop in average monthly interest rate

The average monthly interest rate dropped to 0.8% in Q3, hitting the lowest rate recorded since Q4 2016. This activity translated into lower LTVs, with average LTV levels in Q3 decreasing by 1.5% to 55%.

The average completion time on a bridging loan application jumped to 46 days during the third quarter from 43 during the second quarter, as service and resource levels were impacted by annual leave.

The average term of a bridging loan in the second quarter remained at 11 months.

Commercial director at MTF, Gareth Lewis, said that property investors are seeking attractive opportunities to acquire properties where they can add value, a trend that shows no sign of slowing down.

He added: “Conversely the transaction flow in the regulated space has continued to show signs of slowing down. Is this a direct response to the everyday purchaser taking stock of Brexit and holding fire before looking to commit to the purchase of a new residence?”

Sonny Gosai, head of specialist lending at Clever Lending, said: “Whilst the data suggests that there has been a drop in regulated bridging activity, we have recently set up a team solely to provide regulated bridging advice as we have seen a growth in this area particularly for enquiries.

“It will certainly be interesting to see what the next quarter’s bridging trends results will be.”