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Bridging finance helps brokers’ mortgage clients

Borrowers are using brokers to arrange bridging finance because they face delays in getting a mortgage, an August 2017 FTAdvisor.com article suggests. According to a report titled ‘Bridging Trends’, in the second quarter of 2017, there was a rise of 26% in the value of bridging loans compared to the first quarter of 2017. Over £150m in bridging funds were raised. Brokers report that one of the reasons for their clients needing bridging finance is due to delays in the mortgage application from high street lenders. Bridging loans are used to complete house purchases and can then be repaid once mortgage funds become available. Bridging finance can usually be arranged much more quickly than more long-term loans – sometimes in a day or two. One surprising fact from the report is that refurbishments were the most popular reasons for needing bridging loans. Refurbishments accounted for 27% of all bridging loans, just ahead of mortgage delays at 25%. Although there has been a higher number of bridging loans in 2017, the average loan-to-value of loans has dropped to 45.4% in the second quarter of 2017. This is the lowest percentage it has been since the first quarter of 2015. Borrowers are being more conservative, perhaps influenced by the economic uncertainty following Brexit and the weak pound. Many borrowers are not looking for the cheapest bridging finance deals. If they have had a previous loan and have received efficient and quick service from their lender, they are likely to stick with the lender they know.

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