Take a look at the infographic below to see the trends that shaped the bridging finance market in the first quarter of 2019.

Key Points:

Monthly interest rates fall to lowest level

Regulated bridging transactions increase for first time in a year

Investment property purchase most popular reason for taking out a bridging loan

Director’s comments

Chris Whitney, Head of Specialist Lending at Enness comments:          

“I don’t think it comes as a surprise that interest rates are still under downward pressure as some of the industry’s more mature lenders seek out cheaper costs of funds to stave off the newer entrants- which is good news for consumers. As rates come down, short-term loans become a financially viable way of financing for more and more situations so actually increases business into the sector in my view.

“It’s still surprising where in a market where some lenders seem to be fighting for market share by increasing LTV’s that the average LTV in the index is still only 51%. In terms of volume I think we see more demand for higher LTV’s across the board, but the average LTV is possibly dragged down by larger transactions at low levels i.e. we have just completed a £5m facility against a £26m asset.

“Surprised to see that only 8% of the loans written were for business purposes which we see a lot of demand for. Our buy-to-let team have reported that there has recently been a drop in service standards from buy to let lenders and loans are taking much longer to be agreed and complete. Borrowers are generally getting what they want but just not quickly enough which I think is reflected in the report’s reasons for bridging.

“40 days average completion time has shown a fall but still surprisingly long and, in my experience, outside of most borrowers needs and expectations. The industry must have a hardcore base of borrowers who like to plan ahead, and I don’t think any of them are mine!”

Gareth Lewis, Commercial Director at MT Finance comments:

“Property investors are continuing to turn to bridging finance as a support tool, as reflected in the 22% utilising the product for investment purposes.

“With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those property investors who are looking to expand their portfolio and need certainty when conducting their business and who often need to move swiftly to capitalise on an opportunity.”

Dale Jannels, Managing Director of Impact Specialist Finance comments:

“House buying and owning can become complex, especially in the current climates.  As a result, we are seeing an increasing demand for short-term finance to help meet completion deadlines or to assist funding specialist finance projects.”