"We typically see the market soften slightly during the summer months. Instead, we've witnessed increased lending volumes and faster turnaround times, indicating a more streamlined process"
- Gareth Lewis, managing director of MT Finance
The latest figures from Bridging Trends show a robust third quarter for the bridging finance market, with faster completion times, increased lending volumes and contributor gross lending hitting £220.8 million.
The data reveals completion times fell to 46 days in Q3 2024, down from 52 days in Q2, marking the fastest average completion time since Q2 2019. This is a positive sign that signals improvement in operational efficiency which comes alongside a 9% increase in total gross lending, with contributors recording an increase from £201.8m in Q2 to £220.8m in Q3, continuing the positive upward trend seen throughout the year.
Majority of the bridging loans taken out in Q3 were used for investment purchase – rising from 18% in Q2 to 24% in Q3.
Demand for regulated and unregulated refinance saw the biggest rise, jumping from 6 to 14% and 6 to 13% respectively. Decline in chain-break loans suggest a more stable market with fewer disruptions.
The proportion of first charge loans in Q3 increased from 88.4 to 91% while second charge loans decreased to 8% from 11.6%. The average loan-to-value also dropped fractionally, from 59.3% in Q2 to 56.8% this quarter. Elsewhere, the average term remained at 12 months for the 12th consecutive quarter.
Bridging Trends combines bridging loan completions from several specialist finance packagers operating within the UK bridging market including: AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDN Finance, Optimum Commercial, Sirius Finance and UK Property Finance.
Chris Oatway, chief executive officer of LDN Finance, commented: "Over the past quarter, we’ve seen a notable improvement in the bridging finance sector, with the average completion time reducing significantly, signalling a more efficient market all round. Additionally, lending volumes have increased by 10%, with a marked rise in investors using bridging finance for new acquisitions. With bridging finance usage rising, particularly among investors looking to seize new opportunities, there’s a growing sense of optimism.
"Looking ahead to Q4 2024, we expect continued momentum, with further growth in lending activity as confidence in the market strengthens. With the easing of economic pressures and a stable property environment, we anticipate more investors leveraging bridging finance to secure profitable opportunities, suggesting that the market will continue to improve as we close out the year."
Shane Chawatama from Knowledge Bank, said: “Over the last quarter, bridging demand has remained exceptionally popular. The top three searches on Knowledge Bank continue the trend we have seen this year. Regulated bridging, minimum loan amount, and maximum LTV have held steady. While these three criteria continue to dominate, we’ve also seen increased interest in second charge bridging and adverse credit, underscoring the market’s focus on flexible bridging options, amid the ongoing economic uncertainty continues for customers. Bridging searches have grown consistently over the past two years, and with housing stock challenges remaining in the residential market, we expect demand for creative funding solutions in property improvements and value-adding projects to stay high.”
Gareth Lewis, managing director of MT Finance, added: "The reduction in completion times to a five-year low demonstrates a considered approach from all facets of the market to improve operational efficiency. This is particularly noteworthy given that we typically see the market soften slightly during the summer months. Instead, we've witnessed increased lending volumes and faster turnaround times, indicating a more streamlined process from all parties involved in the bridging transaction chain. The rise in investment purchases to 24% of total lending suggests growing confidence among property investors, who are actively seeking opportunities in the current market. These figures paint a picture of a robust and efficient bridging finance sector that continues to meet the evolving needs of borrowers."
