Small drop in bridging lending during third quarter of 2017
Bridging lending totalled £142.75 million during the third quarter of 2017 – a fall of 4.9% compared to the previous quarter. However, lending was still up 2% compared to the third quarter of 2016. The figures were published in the Bridging Trends report.
First charge lending was 82% of all bridging lending and this is a sign of consistent investment of residential buy to let property.
The average monthly interest rate for bridging finance fell from 0.84% to 0.82%. This is due to increased competition between lenders.
Unregulated loans were 57.1% of all lending in the third quarter of 2017, an increase from 53.9% in the second quarter.
Average loan to value (LTV) rates were up in the third quarter to 49.6%; the average was 45.4% in the previous quarter.
The average completion time for loans increased by four days in the third quarter of 2017 caused by staff shortages with people taking their annual holidays. Some financial experts have called on bridging loan companies to streamline their application process to complete applications quicker.
Mortgage delays are the reason that the majority of bridging loans are taken out. In quarter three, 31% of bridging, loans were due to mortgage delays. In the second quarter of 2017 more bridging loans were used for refurbishments.
Bridging Trends shows there is still a high demand for bridging finance, with brokers and lender optimistic about the future of this finance sector.