Take a look at the latest figures to discover the Bridging Trends that shaped the UK bridging finance market during 2021.
Annual contributor gross lending up 38% in 2021
Annual average LTV hits record high at 57%
Annual demand for 2nd charge loans falls to record low
Dale Jannels, Managing Director, impact Specialist Finance comments:
“The full effects of the stamp duty holiday appear loud and clear in this latest set of Bridging Trends data, and it feels like a watershed moment for the bridging finance market. With it still being a sellers’ market in many parts of the UK, I expect regulated bridging to continue to be popular throughout 2022 and this is being mirrored in our business currently.
“With so much competition between lenders in the bridging finance space, the options now available to brokers and their customers is unrivalled which is pushing up LTVs and reducing rates, so it’s never been a better time to use such a facility either for investment refurbishment purposes or to fund chain breaks.”
Joshua Elash, Founding Director, MT Finance comments:
“Whilst the year end data for 2021 shows a positive and steady recovery in the demand for specialist lending following a challenging 2020, gross lending figures for the year remained significantly down on pre-pandemic 2019. As we move forward into 2022, we expect gross lending figures to fully recover and surpass the 2019 gross figures as more and more investors return to the market with a view to taking early advantage of the anticipated impact inflationary pressures will have on asset prices. Indeed, we note that “investment purchase” is again the single largest demand driver for bridging finance.
“The industry is otherwise in excellent health and although “maximum LTV” is reported as being the top-rated criteria search by Knowledge Bank, it is noted that the average reported LTV of loans in the year sits comfortably below the 60% mark.”
Chris Oatway, Director, LDNfinance comments:
“In Q4 2021 we found there to be a number of lengthy solicitor delays across transactions in the market, so it’s not surprising we’re seeing that ‘funding a chain-break’ was a popular reason for bridging finance. Despite this, we have seen a strong start to 2022 and it’s promising to see that gross lending from contributors was up by almost 40% in 2021 against 2020. Based on the enquiry volumes we received in January, we anticipate a good year ahead.”
Chris Whitney, Head of Specialist Lending, Enness Global comments:
“As a contributor to the data it is always interesting to see what the finished report looks like and whether it reflects our own individual experiences on the ground, and the 2021 report definitely does. Probably our busiest year ever in the short-term lending space, so no real surprise to see the 38% increase although that is still an amazing increase.
“Average interest rates falling was expected as we saw new entrants and well-established players hustling for market share. Probably a trend that will continue with the market feeling very liquid despite inflationary pressures. Perhaps in part fuelling demand as falling cost of funds makes more projects viable for the borrowers and if money is priced well enough people will take more of it, hence the higher LTVs we have seen.
“The continued decline in second charge loans is slightly surprising. However, we have lost some lenders in this sector, and no one really seems to have filled the gap. I think there is definitely room for some product and criteria innovation here.”
Matthew Corker, Operations Director, Knowledge Bank comments:
“Maximum loan to value continued to dominate the most searched terms here at Knowledge Bank, suggesting that brokers are trying to make the most of their budgets and borrowing the maximum they can. Regulated Bridging again featured in our top three. With buyers vastly outnumbering sellers in the residential property market, it appears more common than ever for perspective home movers to use bridging loans to purchase an onward property before theirs has sold.
“Completing our list for the quarter was ‘minimum loan amount’. Interestingly, we’ve seen an increasing number of borrowers look to bridging finance to make minor improvements to properties, in contrast to the beginning of the 2021, where this search term rarely featured.”