Small Increase In Gross Bridging Lending Q1 2021

Despite the coronavirus pandemic, there was a slight rise in the total amount of gross bridging lending according to the Bridging Trends Infographic in the first quarter of 2021. This may come as a surprise to a lot of people.

In the first quarter of 2021 the total gross amount lent by those contributing data for the infographic amounted to £144.51 million. In the last quarter of 2020 the total gross amount lent amounted to £137.22 million. As you can see, that is a modest increase of £7.29 million. It is pleasing to see that there has been an increase in the gross lending figure and it will be interesting to see what happens in the second quarter of 2021 and beyond. Hopefully, we will see a continued upward trend.

Borrowers will be disappointed to read that the average monthly interest rate in the first quarter of 2021 was 0.74% whereas in the last quarter of 2020 the average monthly interest rate was 0.72%. That is a small rise of 0.02%. Conversley, lenders will be pleased to see a higher interest rate.

Borrowers will also be disappointed to read that the average time taken to complete on a bridging loan was 53 days in the first quarter of 2021. In the last quarter of 2020 it was 50 days so that means the period has gone up by 3 days.

The average loan to valuation has gone up to 55.2% in the first quarter of 2021. In the last quarter of 2020 it was 51.3%. That is an increase of 3.9%. Lenders will be disappointed at this change as it means they have a lower security margin. Having said that, the security margin is still a good one.

The average term for a bridging loan in the first quarter of 2021 was 12 months compared to 11 months in the last quarter of 2020.

The main purpose for bridging finance was Chain Break at 20%. Next was Investment Purchase at 19%. In third place was Business purposes at 14%. Next was Regulated Finance at 13% followed by Refurbishment (Heavy) at 10%. That was followed by Re-bridge Finance at 9%. Then we have Auction Purchase at 6%. After that comes Unregulated Finance at 5% and finally we have Other Finance at 4%.

It will be interesting to see what happens to bridging lending throughout the remainder of 2021. We will continue to keep our readers updated periodically.

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