Q1 2019 Sees Drop In Bridging Loan Advances
According to the Bridging Trends infographic produced for the first quarter of 2019, there has been a fall in the total gross amount of lending by way of bridging advances in the first quarter of 2019 when compared with the last quarter of 2018.
The Bridging Trends document is produced using data provided by the following contributing lenders: – MTF, Brightstar, impact specialist finance, Clever Lending, Complety, ENNES, Positive Lending, Pure Commercial Finance, Y3S Bridging & Commercial and UK Property Finance.
The total gross amount lent by way of bridging finance in the first quarter of 2019 amounted to £185.32 million whereas in the last quarter of 2018 the figure was £201.57 million. That is a fall of £16.25 million that is no small sum of money.
The average loan to valuation in the first quarter of 2019 fell to 51.3% compared to 57% in the 4th quarter of 2018. This statistic will please lenders as it indicated a greater level of security in percentage terms meaning a lower level of risk of loss.
The average term for a bridging loan was the same in both Q1 of 2019 and Q4 of 2018 – 12 months. This does seem rather a lengthy period of time for a bridging loan to be in place for.
In the first quarter of 2019, the infographic reveals that 81.7% of advances were secured by way of a first legal charge and 18.3% of advances were secured by way of a second legal charge. In the 4th quarter of 2018 these figures were 82% and 18% respectively – very little change.
It is pleasing to see that the average monthly interest rate fell from 0.80% in the last quarter of 2018 to 0.74% in the first quarter of 2019. This fall could be due to a number of factors such as the possible increased competition between lenders for business.
It is pleasing to read that the average time taken to complete on a bridging loan improved from 42 days in the last quarter of 2018 to 40 days in the first quarter of 2019.
The main reason why someone took on a bridging loan was to complete on the purchase of buying an investment property with 22% of borrowers stating this to be the case. In second place was chain break at 19%, refurbishment of heavy items at 14% was in 3rd place. In fourth place was re-bridging for heavy items at 14%. In 5th place was re-bridging at 11%. In 6th place was business purposes at 8%. In 7th place was unregulated refinance at 7%. In 8th place was regulated refinance also at 7%. In 9th place was auction purchases at 7%. In 10th place was other at 5%.
Here at Commercial Mortgage Link, we will continue to keep our readers up to date with any changes in respect of the above in future quarters.