Bridging loan volumes have hit a three year-high, research suggests.
The latest bridging trends data for the third quarter of 2021 shows gross lending hit £190.2m, up 65 per cent annually and the highest volume since the fourth quarter of 2018.
The figures combine bridging loan completions from several specialist finance packagers operating within the UK bridging market including Adapt Finance, Brightstar Financial, Capital B, Clever Lending, Complete FS, Enness Global, Finanta, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Group and UK Property Finance.
For the second consecutive quarter the purchase of an investment property was the most popular use for a bridging loan at 28 per cent of total transactions – up from 24 per cent in in the second quarter.
This surge was attributed to strong housing market activity ahead of the tapering of the stamp duty holiday in October.
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The extra activity also meant bridging loan processing times returned to the first quarter’s record high of 53 days, up from 47 days in the previous quarter.
First charge bridging loan transactions accounted for 90 per cent of total market volume in the third quarter and the average loan-to-value (LTV) jumped to a record high from 54.9 per cent to 60.2 per cent.
Chris Whitney, head of specialist lending at Enness Global, suggested LTVs are up with borrowers taking advantage of cheaper money before mortgage rates increase.
Dale Jannels, managing director of Impact Specialist Finance, said the figures show that bridging finance is now a better understood product for many brokers.
“The stamp duty holiday has helped bridging finance to be more widely accepted by the mainstream industry as a need to meet speed demands, but investors with the intention to renovate have also been at the forefront of recent requests,” he said.