The UK’s bridging finance sector held steady throughout Q2, achieving modest growth on Q1’s impressive overall performance. According to the latest Bridging Trends report from MT Finance, total bridging activity during the second quarter increased to £146.5 million from £144.5 million in the first quarter.
The report indicated that the vast majority of lending activity taking place during the quarter was made up of first-charge loans. MT Finance revealed that 90% of total market volume was made up by first-charge lending activity, an increase of more than 12% from the previous quarter.
The period’s impressive performance was credited in part to the number of landlords and investors looking to take advantage of the temporary stamp duty holiday. Investment property purchases remained the number-one application for bridging finance, accounting for almost 25% of all loans issued.
Chain break accounted for around 20% of all transactions, making it the second most popular bridging finance application during the period.
The report also indicated that the average bridging loan terms for Q2 were around 12 months, which is the same as the previous quarter.
The commercial director at MT Finance, Gareth Lewis, indicated no real surprise at the sector’s strong performance this year so far.
“As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first charge lending has significantly increased its share of transactional volumes,” he said.
“It will be interesting to see if this percentage decreases in the coming months as consumers look to raise financing out of existing properties to fund further property acquisitions or businesses.”
Evidence of growing confidence in the UK property market
His sentiments were echoed by Chris Whitney, head of specialist lending at Enness, who commented on the generally positive outlook for the sector going forward.
“It looks like we have reached quite a stable platform over the last two quarters. Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline, creating a frenzy of activity. The higher level of investment purchases shows confidence in the UK property market is strong,” he said.
“I am slightly surprised that lending volumes weren’t higher. The market certainly felt very busy as we struggled to get values out in a timely manner due to volumes, and many a solicitor had to burn the midnight oil to keep up with demand.”
Meanwhile, bridging and development finance specialist for Brightstar Financial, Stephen Watts, spoke of the significance of lenders and brokers streamlining application processes to reduce loan completion times.
“Some lenders are now offering automated valuation models up to 75 percent loan to value (LTV) in some circumstances, and with the ability for asset managers to benefit from modern technology and carry out virtual client meetings, more loan applications are benefiting from these time-saving factors,” he said.
Meanwhile, bridging and development finance specialist for Brightstar Financial, Stephen Watts, spoke of the significance of lenders and brokers streamlining application processes to reduce loan completion times.
“Some lenders are now offering automated valuation models up to 75 per cent loan to value (LTV) in some circumstances and with the ability for asset managers to benefit from modern technology and carry out virtual client meetings, more loan applications are benefitting from these time-saving factors,” he said.