Bridging lending up 10% in 2017

Bridging loan volumes increased by 10.7% year-on-year to £534.1m in 2017 (2016: £482.61m), according to the latest research.

The Bridging Trends report published by bridging lender MTF revealed that the total value of bridging loans completed by contributors reached £118.79m in Q1 2017, before increasing to £150.7m in Q2 2017 – the highest level in a quarter since 2015.

The value of loans then dipped in the second half of the year: £142.75m in Q3 2017 and £122.49m in Q4 2017.

Regulated bridging loan activity outperformed unregulated bridging loans for the first time in Q1 2017.

Overall, half of all bridging transactions were unregulated in 2017 (54%), while regulated bridging loans increased to 46% in 2017 (2016: 44%, 2015: 36.6%).

Average monthly interest rates stood at 0.83%, down from 0.85% in 2016, while average completion times averaged 43 days in 2017 (2016: 45 days).

Joshua Elash, director at MTF, said: “It is interesting to note what appears to be a direct correlation between the data reported and the macroeconomic and regulatory changes which have impacted upon the market.

“We have, for example, in this annual reporting cycle, seen regulated bridging finance lending outstrip unregulated bridging finance for the first time.

“This follows on from the implementation of the mortgage credit directive and the consequential introduction of a new class of regulated ‘consumer’ buy-to-let lending.

“Equally, we are interested to note that again for the first time since reporting began, refurbishment to existing investment property was the most popular reason for borrowing during Q2 of last year.  

“This follows on from increases in the stamp duty taxes payable on the acquisition of new buy-to-let properties and indicates a potential strategy shift among professional property investors towards value enhancement.”

Bridging Trends is compiled with data provided by MTF and specialist finance packagers Brightstar Financial, Enness, Positive Lending and SPF Short Term Finance.

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