Large Fall In Bridging Advances In Q2
It will probably not come as a surprise to read that the amount of new money lent by way of bridging loans in the second quarter of 2020 fell significantly when compared with the first quarter of this year. One of the reasons for this will no doubt be due to COVID-19 that may also be having an impact on the current quarter so it will be interesting to see if this is the case when the figures for Q3 2020 are produced.
According to the Bridging Trends infographic, the amount lent in the second quarter of 2020 amounted to £79.4 million whereas in the first quarter of 2020 the figure was £122.86 million – that is a significant reduction of £43.46 million.
The Bridging Trends infographic is issued by mt finance and includes the following contributing packagers – Adapt Finance, Brightstar, Clever Lending, Complety, Capital B Property Finance, Ennes, Finanta, Impact Specialist Finance, Sirius and UK Property Finance.
The average monthly rate of interest charged on bridging finance was 0.85% in Q2 of this year with this being a small rise of 0.05% in comparison to Q1 of 2020 when it was 0.80%. It will be interesting to see what happens in this respect in the coming months.
The average loan to valuation (LTV) in the second quarter of 2020 was 48.8% with this being a drop when compared with the previous quarter when it was 51%. This statistic will no doubt please lenders as it means that their exposure to risk of loss is reduced.
The average term for bridging loans remains the same at 12 months.
The main reason why a bridging loan was taken out was for investment purchase with 25% of loans being for this purpose. In second place was re-bridge at 13% and in third place was business purposes at 12%. Refurbishment (heavy) and chain break are in joint fourth place on 10%. Next are regulated and unregulated finance both on 9%. Other purposes was at 7% and auction purchase was at 5%.
The average time taken to complete on a bridging loan was 50 days with this being one day longer than in quarter one of 2020.
We will provide a summary of the third quarter’s figures for 2020 for bridging finance should they be produced.