BRIDGING TRENDS: bridging loan volume dips in Q3 2017
Bridging loan activity dropped slightly during the third quarter of 2017, according to the latest Bridging Trends data.
Data from Bridging Trends revealed contributor gross lending fell in the third quarter to £142.75 million, down 4.9% on the second quarter (£150.07m) but up 2% on the same quarter last year (£140.49 million).
Bridging Trends, a quarterly publication by bridging lender mtf and specialist finance brokers Brightstar Financial, Enness Private Clients, Positive Lending, and SPF Short Term Finance, launched in 2015 to monitor the general trends in the bridging finance market.
First charge lending remained solid in Q3 at 82%, indicating consistent investment in residential properties-to-let. Whilst second legal charge lending increased for the second consecutive quarter rising to 18%, from 17.2% during Q2 2017.
Average LTV levels hit 49.6% during Q3 2017, up from 45.4% on the previous quarter, suggesting continuing investor confidence in the market.
Average monthly interest rates across 1st and 2nd charge lending decreased to 0.82% from 0.84% in the previous quarter as competition amongst lenders forced rates down.
42.9% of transactions were regulated in Q3, down from 46.1% in the previous quarter.
However, unregulated bridging loans continued to dominate the landscape, with the number of unregulated loans climbing to 57.1% of all lending- up from 53.9% in Q2.
The average completion time on a bridging loan application in Q3 increased by 4 days, as service and resource levels were impacted by annual leave.
Mortgage delays were the most popular reason for obtaining a bridging loan in Q3 2017, contributing to 31% of all lending and reversing the second quarter blip where refurbishment purposes exceeded mortgage delays.
Refurbishments were the second most popular reason for getting a bridging loan at 23%. Business Purposes was third at 13%- up from in 11% in Q2.
The average term of a bridging loan was 12 months during the third quarter, up from 11 months in the previous quarter.
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