bridging loans on the rise as borrowers struggle to secure mortgages
According to our latest broker sentiment survey, an increasing number of brokers are turning to bridging loans after their clients failed to secure a mortgage.
Some 86% of brokers noticed a rise in bridging loan volume during the fourth quarter of 2015, up from 76% in the previous quarter as more borrowers struggled to get mortgages from banks.
91% of the 181 brokers surveyed were unable to source mortgages for some of their clients in the fourth quarter, with almost half attributing affordability as the main barrier.
61% of brokers turned to bridging finance as an alternative source of funding in a bid to fill a liquidity shortfall, compared to 26% that opted for secured loans.
Aside from affordability, 27% of brokers said they were unable to get mortgages for clients with poor credit history and 18% blamed property downvalue.
The south-east saw the biggest demand for bridging loans in the UK during Q4 2015 at 50%, followed by London, which grew to 33% in the fourth quarter, up from 28% during the third quarter of 2015.
Bridging finance was seen a useful financial tool by 100% of brokers surveyed during the fourth quarter, up from 93% in the third quarter and 77% during the second quarter, showing its growing prominence as a loan product.
Bridging finance continues to plug a funding gap as borrowers seek specialist and flexible funding from bridging finance lenders
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