Drop In Gross Bridging Lending In Q3
According to the Bridging Trends infographic covering the third quarter of 2017 there has been a small reduction in the amount of gross bridging lending made by those lenders contributing to the infographic when compared with the second quarter of 2017. In Q3 of this year gross bridging lending amounted to £142.75 million whereas in the second quarter of 2017 the figure was £150.07 million. This is a fall of £7.32 million equating to a fall of 4.9%.
The contributor lenders are mtf, Brightstar, Enness Private Clients, Positive Lending and SPF Short Term Finance.
It is pleasing to see that the average monthly interest rate for such lending dropped by 0.02% from 0.84% in Q2 of this year to 0.82% in Q3 of 2017. It will be interesting to see what happens in the last quarter of this year.
In terms of security, 82% of bridging loans were secured by a first mortgage and 18% were secured by a second charge in the third quarter of 2017. In the second quarter of 2017, 82.8% of bridging loans were secured by a first mortgage and 17.2% were secured by a second charge.
The average term of a bridging loan increased by a month from 11 months in the 2nd quarter of 2017 to 12 months in the third quarter of 2017. As we have said previously, the days of when many bridging loans were for a few short weeks seem to be almost a thing of the past although there will no doubt be some that have a term of a few days/weeks.
The average loan to valuation (LTV) rose to 49.6% in Q3 of 2017 compared to 45.4% in Q2 of 2017. This is a rise of 4.2% – quite a sizeable percentage.
The average time taken to complete on a bridging loan rose by 4 days from 39 days in the second quarter of 2017 to 43 days in the third quarter of 2017.
When looking at the main purpose people took out a bridging loan in the third quarter of 2017 31% said it was in respect of mortgage delays whereas in Q2 of 2017 this accounted for 25% of bridging loans. In second place was refurbishment at 23% – a drop of 4% on Q2’s figure of 2017 of 27%. In third place was business purposes at 13% compared to 11% in Q2 of this year. In 4th place was re-bridging at 12% compared to 13% in Q2 of 2017. In 5th place was other at 11% compared to 15% in Q2 of 2017. In 6th place was auction purchases at 10% compared with 9% in Q2 of this year.
We will continue to keep our readers updated when future quarterly infographics are produced about bridging finance.