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Bridging completions drop below £3bn as defaults and applications rise

  • 15/02/2021
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Bridging completions drop below £3bn as defaults and applications rise
Bridging completions dropped 28 per cent in value to £2.88bn in 2020, down from £3.99bn in 2019, according to the Association of Short Term Lenders (ASTL).


The value of loans in default in Q4 2020 increased by 14 per cent on Q3 and was 24 per cent higher than the same period the previous year as borrowers continued to feel the financial impact of the pandemic, the trade body said.

However, it was more upbeat for prospects coming into this year as it noted applications had increased significantly on 2019 numbers in the second half of last year.

This was highlighted by the value of applications in 2020 increasing to £25.82bn, up from £23.19bn in 2019.

ASTL data showed the surge in applications in Q3 last year went on to drive a 35 per cent increase in completions in Q4 – with £918m worth of completions during the quarter.

Applications in Q4 2020 were at £6.69bn, down by 13 per cent from Q3 but still up by 23 per cent on the same quarter in 2019.


LTVs and loan books dip

Average loan to values (LTVs) fell slightly in Q4 and have now dropped to below 59 per cent and bridging loan books dropped to £4.48bn, a decrease of 2.5 per cent on the previous year.

Vic Jannels, CEO of the ASTL, (pictured) said: “Completions were down on the previous year, which is to be expected given the periods of national lockdown.

“However, applications were actually higher than in 2019, which reflects the enormous potential the bridging market has to provide customers with a funding solution through these difficult times.

“We must, however, remain cautious. The effects of economic slowdown are starting to be reflected by the value of loans in default and, while the roll out of the vaccine for Covid-19 continues at pace, a return to normal levels of economic activity seems unlikely before the summer, so these trends may persist for several months.”




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