Interesting Statistics In Latest “Bridging Trends” Document
Back in April we commented on the first “Bridging Trends” report that was produced by a number of financial institutions that covered bridging loans for the first quarter of 2015. Following the release of the latest report we thought that we would share some of the data contained in it that covers the second quarter of this year.
The total amount of money lent for bridging finance in Q2 2015 was £99.11 million that was an increase of over £18 million on the first quarter of this year. The reason for this increase could be down to the general election creating an uncertain residential lending market resulting in delays being seen in lenders making decisions about such applications. In the first quarter of 2015, 8% of bridging loan applications were due to such delays but in Q2 of 2015 this had risen to 33% – a huge increase.
The average interest rate charged by lenders providing bridging finance dropped by 0.4% to 0.91% when comparing both quarters of 2015. This has been put down to more regulated business being processed that rose from 31.5% to 46.7%.
The average term for bridging finance has remained the same at 11 months. Many years ago, such finance tended to be liquidated over a shorter period. It will be interesting to see if this statistic varies in future quarters.
The average LTV (loan to valuation) has dropped from 50.1% in the first quarter of 2015 to 45.9% in Q2 of this year.
The most popular reason for arranging a bridging loan was due to mortgage delays (33%) followed by property refurbishment (22%). In Q1 2015, property refurbishment was the main reason (26%).
Due to the rise in the amount of regulated business, the average time taken to complete on a bridging loan rose from 34 days in Q1 to 39 days in Q2. This is a disappointing statistic.
85.1% (81.7% Q1) of transactions were secured by a first legal charge with the remaining 14.9% (18.3% Q1) being by way of a second charge.
We shall continue to keep you updated when the next “Bridging Trends” report is available.