Released earlier today, the Q2 2024 Bridging Trends data shows that contributor gross lending rose for the fourth consecutive quarter. Hitting £201.8 million, this is a 2.9% increase on Q1’s £196.2 million and the highest Q2 figure since Bridging Trends records began in 2015. Compiled by MT Finance, this quarterly infographic acts as a snapshot of the industry and brings together statistics from 12 of the UK’s leading finance brokers. Here are the key facts you need to know.
Borrowers favouring speed and flexibility
Speed is often the key driver in a client’s decision to take out a bridging loan and Q2 appears to be no exception. Preventing a chain break was the most popular use of a bridging loan at 23%, up from 19% in Q1, and could be attributed to borrowers facing continuing conveyancing delays in the mainstream mortgage market. Purchasing an investment asset came in second and accounted for 18% of transactions in Q2, down from 21% in Q1.
Meanwhile, demand for auction finance saw the biggest uplift, rising from 9% in Q1 to 14% in Q2. This is likely due to an increased number of savvy buyers taking advantage of undervalue sales amidst a relatively flat property market.
This jump in speed-focused bridging loans may also have contributed to the drop in the average completion time which fell from 58 days in Q1 to 52 days in Q2. This is the lowest it’s been since it hit 47 days in Q2 2021.
Purchases over unlocking equity
After nearly doubling from 11.6% in Q4 2023, second charge lending hit 21.3% in Q1 – the highest it’s been since Q1 2021 – before falling back to 11.6% in Q2. There is a direct correlation between this and the increase in purchase-focused bridging loans which rose to 55% of transactions in Q2, up from 49% in Q1. The jump in first charges also had an effect on the average monthly interest rate which dropped marginally from 0.89% in Q1 to 0.86% in Q2.
While it’s clear that borrowers are motivated to move quickly, there also seems to be a growing acceptance of the economic environment when it comes to buying new assets. This could also be why we saw an uptick in unregulated lending in Q2, which rose from 49% in Q1 to 54.2%. Despite a decrease in regulated loans – which fell from 51% in Q1 to 45.8% in Q2 – data provided by Knowledge Bank showed that ‘regulated bridging’ was still the top criteria search made by UK bridging finance brokers in Q2, highlighting how powerful a tool it can be for homeowners.
Elsewhere, the average loan-to-value dipped from 60% in Q1 to 59.3% in Q2 and the average term was static at 12 months.
Speedy solutions from MT Finance
MT Finance remain committed to supporting you and your clients, regardless of external economic factors. Our regulated and unregulated bridging loans can be used for a variety of purposes, including purchasing an investment asset, preventing a chain break, unlocking auction finance and funding a refurb. If your client is in need of a particularly speedy solution then an AVM may help to further expedite the process. Available on qualifying standard residential bridging applications, if your client’s property is eligible then you can receive a valuation within seconds.
Brokers always have direct access to decisionmakers which helps to ensure a case progresses as swiftly as possible and means that if any problems do arise then they can be dealt with quickly and effectively.
If you have a case that you’d like to discuss with us then we’d love to hear from you. Simply fill in our online form and we’ll be in touch shortly.
Bridging Trends combines bridging loan completions from several specialist finance packagers operating within the UK bridging market: AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Group, and UK Property Finance. The data for top broker criteria searches is supplied by Knowledge Bank.