Take a look at the infographic below to see the trends that shaped the bridging finance market in Q3 2015.
- Total contributor lending increased to £131.72m
- Average LTV increased to 50.9%
- Average monthly interest rate increased to 0.92%
- Mortgage delays remains most popular use for bridging loans
- Regulated loans dropped to 32%
- Average term 10 months
Joshua Elash, Director at bridging loan lender, MTF:
The percentage of first charge business versus second charge, the average monthly interest rates, average terms, and the LTV data shown in the first three quarterly reports are all sufficiently consistent to begin to give us reliable insight into the bridging finance market.
We are however, surprised to see the average number of days being taken to complete a bridging loan lengthening out further from what already appeared to be a rather extended period of 39 days as per the Q2 results. This may be a seasonal anomaly and we are interested to see how this figure will shift as we move into the final quarter of the year.
Chris Fairfax, Managing Director of Positive Lending:
Chris Whitney, Head of Specialist Lending at Enness Private Clients:
The sentiment in the market overall feels as though there is a real appetite to gear as high as possible. However the Average LTV in the bridging trends remains surprisingly low. This would seem to fly in the face of critics who often claim bridging is irresponsible lending.
Mortgage delays are certainly an issue as the figures show. I also feel that this isn’t just an issue caused by the summer holidays. The regulators tightening their grip has meant additional underwriting and more onerous processes for clients and their brokers to negotiate making the whole process much slower. Refurbishment loans also still a big part of the business mix as the short term finance market continues to service the space left by some of the main stream development funders.
Kit Thompson, Director of Bridging at Brightstar:
Apart from the increase in lending, the Q3 figures are comparative to those reported in Q1 and I would predict that this will remain typical over the whole year. The slight drop in regulated transactions could be attributed to forthcoming MCD regulation, but I feel it is probably too early for this to have any significant affect. If MCD is to have any bearing, then this will show when comparing Q1 and Q2 2016.
The biggest and most disappointing variance has been in the average completion time, which has increased quarter on quarter with the average now at 45 days. This is not a surprise as bridging cases still tend to experience two bottle-necks, which have plagued the industry for some time, namely; valuation delays and legal delays, with the latter being the largest contributor to delayed completions. Lenders need to increase the number of surveyors on their panel to allow for service delays and it has been suggested before, but an expert panel of solicitors who are well versed in dealing with bridging should be made available to borrowers as a choice, rather than their own perhaps inexperienced conveyancer who has never dealt with bridging before.