bridging interest rates continue to hit record lows
According to the latest Bridging Trends data, the average bridging loan interest rate fell to another historic low in the second quarter, as the sector continued to perform strongly- with Bridging Trends contributors transacting a total of £178.4 million in Q2- up 14% on the previous quarter (£156.8 million).
Despite predictions that it was going to soften in Q2, the property market was extremely busy as demand continued to outstrip supply. The fast-paced property market has increased the appetite for bridging and has led to greater competition between lenders.
interest rates fall again
Lender competition continued to drive bridging rates down to record lows in Q2, with the average monthly interest rate falling to 0.69%- down from the previous record low reported in Q1 (0.71%).
Whilst the average loan-to-value (LTVs) edged up slightly from 54.5% in Q1 to 56.1% in Q2.
providing a competitive edge
Continued shortage of stock means there has been no let-up in terms of pressure on buyers. With several purchasers competing for the same property in some instances, there is a need to move quickly. Therefore, it was no surprise to see that purchasing an investment property was the main reason for taking out a bridging loan in Q2, accounting for 24% of transactions. Funding a chain break stayed in second place at 23% of total transactions.
search for space continues
The greatest increase in demand came from homeowners looking to unlock equity in their main residences, which doubled from 5% of transactions in Q1 to 10% in Q2. This shift could indicate a sustained focus on renovating and creating more space, instead of trying to compete in a busy market.
The non-regulated bridging sector also saw an uptick in refinancing purposes, although the jump was less dramatic – 9% in Q1 to 11% in Q2. Again, this could be down to investors and landlords looking to improve a property, a sentiment which was echoed by the increase – albeit very small – in property conversions, up from 12% in Q1 to 13% in Q2.
how MT Finance can help
We know that things may seem uncertain at the moment but here at MT Finance we are as dedicated to our borrowers as ever. Our bridging loans are as fast, flexible, and stress-free as always and every case is considered on its individual merits. If you would like to discuss a potential enquiry with our team, they can be contacted online, via email or on 0203 051 2331.
* 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.