"It will be interesting to see what happens over the coming months, but hopefully the sector can look forward to buoyant growth."
Despite this, lenders say that investor demand for bridging finance is gathering pace amid Brexit uncertainty and tougher restrictions on bank lending.
Bridging Trends groups together the figures from lender MT Finance and specialist finance brokers Brightstar Financial, Clever Lending, Complete FS, Enness, Impact Specialist Finance, Positive Lending, Pure Commercial Finance, Y3S, and UK Property Finance.
The number of regulated loans transacted by Bridging Trends contributors decreased from 38.3% in Q1 to 37.5% in Q2. However, second charge loan transactions saw a slight increase in Q2, up from 18.3% in the previous quarter to 18.7%.
Average LTV levels increased by 1.55% in the second quarter to 52.85% and the average interest rate rose by 5bps to 0.79%.
Additionally, the average completion time on a bridging loan application in the second quarter increased by four days to 44.
The data also shows that for the second consecutive quarter the most popular use of a bridging loan was to purchase investment property, contributing to 25% of all lending in Q2, up from 22% during Q1.
A traditional chain-break was the second most popular use for bridging finance in the second quarter, contributing to 18% of all lending. Meanwhile, bridging loans for business purposes increased to 12% - up from 8% in Q1 2019.
Gareth Lewis, commercial director at MT Finance, commented: “Now that Boris Johnson has been announced as the new PM and has made Brexit top of his to-do list, this should help give the market the certainty it needs. If the rumours of a stamp duty overhaul are true, we expect the change to ease the pressures of regulation and excessive taxation on UK property investors. It will be interesting to see what happens over the coming months, but hopefully the sector can look forward to buoyant growth.”
Dale Jannels, MD at impact Specialist Finance, added: “I’m not surprised that chain break finance was the second most popular reason for obtaining bridging finance in the last quarter. We’re in uncertain times and this uncertainty transfers into property transactions also.
“Customers are also being gazumped and looking for short-term finance assistance to speed up the purchase of their dream property. Add in the complexity of many property transactions and the high-street lender will say no, yet short-term finance might get them over the initial line.”
