Bridging finance is increasingly being used as a viable financial tool to provide real time funding to plug any gap before longer term finance can be put in place. The South East saw the biggest demand for bridging loans in the UK at 40%, up from 29% in 4Q16. The second highest area of demand was London, at 30%.
The most popular reason for taking out a bridging loan in the first quarter was to fund a development project at 30%, followed by the purchase of an investment property, at 20%. Demand for financing investment purchases grew from 6% in the fourth quarter, showing healthy appetite from landlords to take on new properties, despite recent changes to tax relief.
Some 45% of the 100 brokers surveyed said competition was the key issue currently facing the bridging finance sector, while 30% cited delays, followed by regulation at 15%.
When asked 'where would you like to see more product enhancements in the bridging finance sector?' The majority (40%) of the brokers surveyed said they would like to see higher Loan-To-Values. Some 25% wanted greater flexibility from lenders on commercial lending and 15% wanted greater flexibility on adverse applicants.
When it comes to choosing a bridging finance lender for their clients, 40% of brokers said interest rates and pricing was most important, while 30% said speed of completion was paramount.
James Anderson, Head of New Business at mtf, commented on the findings:
“The feedback from brokers points to a strong need for specialist lending, particularly from developers who continue to support the housing market by providing further supply to meet the ever-constant demand.”
