Investor demand continues for bridging loans
By Gareth Lewis, Commercial Director at MT Finance
The latest set of Bridging Trends data has been released this morning and property purchase remained the most frequently used purpose for a short-term loan. This Q3 report is the third successive quarter that property purchase took the top spot with 22%, slightly down from the 25% seen in Q2. The second placed purpose was for traditional chain breaking, taking 20% of the share, up from 18% in the previous quarter.
Bridging Trends is a data set collected from ourselves, MT Finance, and specialist finance brokers Brightstar Financial, Capital B, Clever Lending, Complete FS, Enness, Impact Specialist Finance, Positive Lending, Y3S, and UK Property Finance.
This latest report indicates that homeowners and property investors are continuing to take advantage of the fast nature of bridging loans to make their property purchase. The continuing uncertainty of Brexit has had a big affect on property prices, especially in London, and investors may seek to add to their portfolios before its conclusion.
Bridging loan growth was slightly down in Q3 with transacted volume reported at £181.64m, down £3.2m from the previous quarter. The was also an increase in regulated loans in the third quarter, up from 37.5% to 42%. Average interest fell by 0.05% to 0.74%. Second charge loans remained at a consistent figure at 18.4% and average LTV levels came in at 53.1%. The average term for a bridging loan was unchanged at 12 months, but average completion time went up to 51 days.
Key trends for Q3 2019:
- Property investment purchase was most popular
- Average monthly interest rate fell to 0.74%
- Regulated loans made up 42% of total loans transacted
- Gross contributor lending fell by £3.2m
In my opinion, bridging loan activity for the third quarter remained stable, coupled with the most popular uses, is a good indication of strong demand from borrowers seeking to purchase property fast while prices are low, ahead of Brexit’s conclusion.
It’s quite clear that the uncertainty of Brexit has had its effect on the London property market, with prices dropping significantly in many boroughs. This has prompted many property investors to utilise the speed of bridging loans to act quickly on opportunities. With the EU deadline now extended, it would be reasonable that we’ll see the same trends continue throughout the rest of the year.
To view the Bridging Trends Q3 2019 infographic, please visit www.bridgingtrends.com