Bridging Lending Increases In Q1

The Bridging Trends report covering the first quarter of 2016 has recently been published that provides certain information about bridging loans that has been made available by a number of specialist lenders. Let’s have a look at some of the highlights of the document.

Q1 2016 saw a rise in bridging lending in comparison to Q4 of last year.
An increase was seen in the amount advanced by way of bridging loans when comparing Q1 of 2016 with Q4 of 2015.

In the first quarter of 2016, £125.35 million was advanced by the lenders providing the data. This was a rise of £4.14 million in comparison to the previous quarter.

In Q1 2016, the average monthly rate of interest was 0.89% whereas in Q4 of last year the rate was 0.87% – an increase of 0.02%. This has been attributed to a rise in second mortgage lending that rose from 9.6% in Q4 of 2015 to 17.5% in Q1 of 2016. First mortgage lending was 90.4% in Q4 of 2015 but fell to 82.5% in Q1 of 2016.

The average term for a bridging loan has remained the same when comparing the first quarter of 2016 with the last quarter of 2015 – 10 months. Many years ago, bridging finance used to be over a shorter term than it is nowadays. This is probably due to the reasons why people now take on such borrowing.

Bridging loans were completing a lot quicker in the first quarter of this year when it was taking on average 37 days in comparison to 41 days for the last quarter of 2015.

The average loan to valuation (LTV) went up from 49.9% in Q4 of 2015 to 52.8% in Q1 of 2016. No doubt lenders would have preferred this figure to decrease to provide a greater security margin.

Bridging loans are taken out for a variety of reasons. It is interesting to see that the most popular reason was due to mortgage delays with 42% of applicants requiring a bridging loan for that purpose. In second place was refurbishment costs with 21% of people needing short-term finance for that purpose. Business purposes was the third most popular reason why someone wanted a bridging loan at 17%. Re-bridging was arranged by 9% of borrowers. Auction purposes accounted for 8% of requests. Other purposes accounted for the remaining 3%.

We trust that you have found the above data about bridging loans to be of interest.

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