annual bridging activity rises to all-time high
According to the latest Bridging Trends data, annual bridging activity rose in 2022 with contributors transacting a total of £716.2m throughout the year as record low interest rates powered demand. Not only is this 14% up on 2021 (£626.7m) but it is also the highest figure we’ve seen since the £732.7m transacted in 2019.
This post-pandemic recovery is extremely encouraging to see, particularly considering last year’s political and economic challenges. Here are the key facts you need to know about.
average interest rate drops to lowest annual figure
When it came to interest rates, 2022 really was a year of two halves. Increased competition among lenders at the beginning of the year saw average monthly interest rates fall to 0.71% and 0.69% in Qs 1 and 2 respectively, before climbing slightly (0.73% in Q3 and 0.79% in Q4) as the cost of borrowing increased after September’s mini-Budget.
Despite the mini-Budget’s impact, the average annual interest rate for 2022 was 0.73%, the lowest yearly number we’ve seen since records began in 2015 and down from 0.76% in 2021 and 0.79% in 2020.
borrowers utilising bridging’s versatility
While purchasing an investment property still accounted for the most amount of transactions in 2022 – at 23% – this was a slight drop from the 25% we saw in 2021. Interestingly, loans for unregulated refinance saw the greatest increase in demand, nearly doubling from 6% in 2021 to 11% in 2022. This shows that property investors and landlords looked to maximise rental yield by enhancing investment properties in 2022 instead of trying to compete in a busy buyers’ market.
demand for regulated lending increases
Demand for regulated bridging rose once again in 2022 and accounted for 44% of all contributor transactions, up from 40.8% in 2021. This rise can be attributed to the continued shortage of housing stock which meant there was serious competition and pressure on buyers this year. A need for rapid transactional support was also demonstrated by the rise in bridging loans being used to prevent chain breaks, which increased from 18% in 2021 to 20% in 2022.
how MT Finance can help
Here at MT Finance we are committed to supporting investors, landlords and property professionals. Our bridging loans can be used for a variety of different purposes – including preventing a chain break, funding an investment purchase and undertaking a light or heavy refurb – and have been specially formulated to be as fast, flexible and stress-free as possible.
* Bridging Trends combines bridging loan completions from several specialist finance packagers operating within the UK bridging market: Adapt Finance, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness Global, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Group and UK Property Finance.