Q2 2016 Sees Fall In Amount Lent By Way Of Bridging Loan

According to the latest quarterly Bridging Trends report that covers the period from the 1st April 2016 to 30 June 2016 there has been a significant drop in the amount lent on bridging loans by a variety of lenders in comparison to the previous quarter. Could this be in part due to uncertainty amongst people following the recent Brexit vote in which it has been decided that the UK is to leave the European Union?

A reduction in the amount advanced on bridging loan has been seen in Q2 of 2016 in comparison to Q1 of 2016
The amount lent by way of bridging finance has fallen when comparing Q2 with Q1 of 2016.

The Bridging Trends report is produced using a number of lenders who are MT Finance, Brightstar Financial, Ennes Private Clients, Positive Lending and SPF.

In the second quarter of 2016, the amount lent through the above lenders amounted to £91.11 million. This was a considerable drop when compared with the first quarter of 2016 when £125.35 million was advanced by way of bridging loans.

The average monthly interest rate reduced marginally by 0.01% when comparing both of the above quarters. In Q2 of 2016 the rate was 0.88% and in Q1 of 2016 it was 0.89%.

The main reason why someone arranged a bridging loan was due to delays in their mortgage being processed with 30% of people borrowing for this purpose. 22% of people arranged a bridging loan to carry out refurbishments. 20% of people borrowed for business purposes. 9% of people took out this form of short-term finance to re-bridge. 8% of people borrowed in this way to buy a property at auction and 11% of people borrowed for some other purpose.

The average term that a borrower took out a bridging loan for was for a period of 11 months whereas in Q1 of 2016 the term was 10 months.

The average LTV fell from 52.8% in the first quarter of 2016 to 47.4% in the second quarter of 2016.

The average time taken to complete on a bridging loan in Q2 of 2016 has increased by 9 days to 46 days that appears to be a big increase.

We trust that you have found this information relating to bridging loans to be of interest. We will keep you updated when further quarterly figures become available in respect of bridging finance.

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