First “Bridging Trends” Report Produced
The first quarterly report called “Bridging Trends” has been put together by five firms from within the bridging finance sector and it makes for interesting reading. So, we thought that we would share some of the statistics contained in the report with you.
Those firms providing data from their records to make up the report were MTF, SPF Short Term Finance (SPF), Positive Lending, Enness Private Clients and Brightstar Financial.
In the period 1st January to 31st March 2015 the total gross amount lent was £80.47 million, the average LTV (Loan to Valuation) was 50.1%, the average interest rate was 0.95% per month, the average term of borrowing was 11 months, the average time taken to complete on a bridging loan was 34 days, the most popular reason for bridging finance being sought was for property refurbishment (26%), first charges were taken as security in 81.7% of cases with second charges making up the remaining 18.3%.
As you can see from the above data, the average LTV was only 50.1% thus providing the lenders with a good security margin. Therefore, should a transaction become protracted, their risk would appear to be low.
Another interesting statistic is the average term of the borrowing being as lengthy as 11 months. In the past, one would have expected bridging loans to have run for a much shorter period of time – perhaps only for a few weeks. Perhaps it raises the question as to whether you can continue to call a lending facility that runs for such a long period of time a “bridging” loan!
It does not come as a surprise to see that the most popular reason for someone requiring bridging finance was for property refurbishment. This was closely followed by business use (24%), 11% was for re-bridging, 10% for making purchases at auction, mortgage delays accounted for 8% of requests, and 21% was for “Other” purposes.
It will be interesting to see future quarterly “Bridging Trends” reports to monitor any variances in the data.