The Association of Short Term Lenders (ASTL) has announced that their members reported that the total value of bridging loans issued had increased by 10.3% compared to the same period in 2017, however, values were down by 6.6% in the second quarter this year compared to the previous quarter.
ASTL chief executive, Benson Hersch, said:
“Although figures for Q2 2018 are down on the two previous quarters, they remain high. Our members continue to provide flexible and useful services to customers who require finance. The property market may be difficult at the moment, but responsible bridging lenders continue to prosper.”
Just over a third (34%) of bridging loans in Q2 of 2018 for property refurbishments. This is a significant increase from 18% in Q1. This is probably due to investors making improvements to properties to increases their value. New energy efficiency rules have prevented landlords issuing new leases on buildings that have low energy efficiency ratings. Landlords have been using bridging loans to finance energy efficiency upgrade work.
Competition remains strong amongst bridging lenders and new lenders have entered the market. This has meant that interest rates on bridging loans are competitive. Bridging finance is a well-established specialist lending market which property investors are turning to as a useful way of financing their property business deals.
Despite the dip in total lending, bridging lenders are optimistic that the high demand for bridging finance will continue.