Both in an economic and political sense, 2019 will go down in history as one of the UK’s most unstable periods. This did not stop bridging finance activity once again, showing remarkable strength and resilience, with the sector having performed better than expected throughout the entire 12-month period.
This is perhaps attributed in part to the fact that average monthly interest rates on bridging loans fell to new record lows in Q1 and Q3—0.74% during both quarters. Stricter borrowing criteria on the High Street may have also contributed to the strong performance, which is now lined up for an even more impressive 2020.
Heavy activity and growing regulation
In total, the bridging finance sector issued loans with a combined value of £732.7 million last year. Of these, approximately 39% of all transactions represented impressive growth from the 36% recorded in 2018. The highest levels of bridging loan activity were recorded during the first three months of the year, totalling approximately £185.32 million in loans issued.
There were no big changes in applicants’ motivations for taking out bridging loans last year, as the following figures demonstrate:
- Auction purchases: 7%
- Investment purchases: 23%
- Business purposes: 9%
- Chain break: 18%
- Heavy refurbishment: 14%
- Re-bridge: 11%
- Regulated refinance: 6%
- Unregulated refinance: 9%
- Other: 5%
On the whole, the most popular reason for applying for bridging finance throughout each quarter of the year was to purchase an investment property (23%). Interest rates across the board remained lower than in 2018 throughout the year, averaging 0.76% for the year, down from 0.81% in 2018.
Average LTV is decreasing.
Interestingly, the average LTV requested on bridging finance in 2019 fell from 55% to 53%. This indirectly suggests that applicants are actively seeking lower contributions to planned purchases and investments rather than taking on unnecessary debt.
It was also noted that the average completion time for a bridging loan in 2019 had increased to 47 days from the previous year’s 45 days. The average loan term for bridging finance last year stood at 12 months, up from the 11-month average of 2018.
Second-charge loans occupied a significantly bigger share of the bridging market in 2019, accounting for around 20% of all loans issued in 2019—an increase from the 17% recorded a year earlier.
Compare the market with UK Property Finance.
The key to accessing the best possible deal on a high-quality bridging loan continues to lie in comparing the market in its entirety. At UK Property Finance, our experience and expertise extend to all types of bridging loans for all purposes.
We will help you find an unbeatable deal by comparing exclusive offers from our extensive panel of lending partners across the UK. For more information or to discuss your requirements in more detail, contact a member of the team at UK Property Finance anytime.