Francesco Amato (pictured), senior associate for specialist regulated finance at Karis Capital – the specialist real estate debt and insurance advisory firm behind the research – said rising demand from owner-occupiers looking to avoid delays in property chains has helped drive growth in the value of regulated bridging loans.
Rather than be forced to wait many months for other properties in the chain to sell, more buyers chose to borrow in the bridging loan market while waiting for a better opportunity to sell their existing properties.
Once they have sold the property, they can repay the bridging loan and refinance onto a long-term mortgage.
Bridging loans allowed borrowers to ‘break the chain’ when an unpredictable housing market makes it difficult to sell an existing property before buying another, said Karis Capital.
Amato commented: “In a property market that is being slowed for the moment by fluctuating interest rates, bridging loans give some buyers a different route to get their property purchases completed.
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“While a bridging loan won’t be suitable for everyone, it’s an option that allows buyers in some situations to move their purchases forward when a conventional mortgage isn’t suitable. With the right exit plan, they are an important tool for property buyers.”
