The latest Bridging Trends data showed that in 2017, the value of bridging loans increased by 10.7% to a total of £534.1m.
In the first quarter of 2017, bridging loans to the value of £118.79m were completed. This increased to £150.7m in the second quarter and then decreased slightly to £142.75m in the third quarter, before dropping down to £122.49m in the fourth quarter.
The average loan-to-value dropped to 46.6% in 2017, compared to 49% in 2016. The average monthly interest rate was 0.83% in 2017, down from 0.85% in 2016 and 0.91% in 2015.
The average period for a bridging loan was 12 months in 2017, compared to 11 months in 2016. Completely time for loans fell to an average of 43 days last year – two days shorter than in 2016.
The most popular reason for bridging loans were mortgage delays, which accounted for 29% of all bridging lending – a figure down from 34% in 2016. However, in the second quarter of 2017, more loans were for refurbishing than due to delayed mortgages.
Bridging loans used to be widely regarded as a minority or niche financial product, but the rise in demand for short-term loans means that bridging finance is now seen as a mainstream lending sector.
Despite challenges for the property market from Brexit uncertainty, the Bank of England interest rate rise and the cut in tax relief for buy-to-let landlords, the bridging finance sector continues to show encouraging figures.