Will bridging activity slow down?
The Bridging Trends report revealed that in the first quarter of 2018, the volume of bridging loans dramatically increased, but will this boom continue?
During the first quarter of 2018, £154.02 million was lent in bridging loans. This was up on the last quarter of 2017 figure of £150.07 million and almost double the total of £80.47 million three years ago.
Lenders and bridging loan brokers are confident that the bridging loan market will continue to grow. The Association of Short Term Lenders (ASTL) discovered that 78% of its members expected their business to grow in 2018.
There are several areas where bridging loan demand is expected to be high. Almost all (93%) of ASTL members said that loans to small to medium house builders would be a growth area.
Some regions of the UK are experiencing slow house price growth. Investors have been refurbishing property to add values and using bridging loans to finance construction work.
Residential and commercial landlords have to make sure that buildings conform to minimum energy performance ratings, and some will need bridging finance to upgrade their buildings.
Mortgage approvals are taking longer, and this has increased the demand for bridging loans that can be arranged quickly then repaid after the mortgage process has been completed.
Bridging loans used to be a niche lending product used mainly to complete residential house sales quickly. The widening reasons for bridging loans means that bridging finance is regarded as mainstream and demand for bridging products should continue to grow.