With more property investors using bridging loans to finance their property deals, the number of bridging loans arranged in the first quarter of 2017 has increased.
The latest figures from the Broker Sentiment Survey, published in PropertyInvestorToday.co.uk in May 2017, found that 59% of bridging brokers reported an increase in the number of loans they issued in the first quarter of 2017 compared to 2016. A similar survey at the beginning of the year found that 31% of brokers reported increased business in the last quarter of 2016.
Bridging loans are mainly used to fill a short-term financial gap until more long-term finance is available. Bridging loans to fund development projects represented 30% of all bridging loans, and 20% of loans were for purchasing investment property.
Despite tax and stamp duty changes that have made it more expensive for landlords to run their business, the figures show that many landlords are still buying new property and using bridging loans as one of their finance options.
The survey also found that the bridging finance market is facing challenges. Competition was a key issue identified by brokers, which has cut interest rates and fees but has made bridging finance less profitable. Of the brokers surveyed, 30% said that another problem they have faced is delays in arranging bridging loans. Tougher regulation that could restrict bridging finance is a fear for 15% of those surveyed.
There is a large demand for property, and the survey highlights the continuing need for specialist bridging lenders to help finance deals.