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Record £3 billion of bridging loans in second quarter of 2017

The Association of Short Term Lenders (ASTL) reported that its members issued £3 billion worth of bridging loans in the second quarter of 2017. This is a 12.1% increase in the value of loans in the first quarter of 2017 and a 17.1% increase compared to the first quarter of 2016.

Benson Hersch the chief executive officer of the ASTL said:

“The increase in positivity shown by members in a recent sentiment survey seems to be reflected in the latest figures.”

Hersch was unsure how the Brexit negotiations will affect bridging finance. At the present time lending activity is good, but with interest rates expected to rise, the growth in bridging finance could slow down.

The average loan to value rates for property bridging loans have dropped to a low of 45.4% during quarter two of 2017 which is the lowest it has been since the beginning of 2015.

The average length of a bridging loan was 11 months during the second quarter of 2017, down from 12 months in the first quarter of 2017.

Completion time for regulated bridging loans has dropped to 39 days, 11 days down from the previous average of 50 days. Unregulated bridging loans often have faster completion times.

Delays in mortgages used to be the most common reason for bridging loans, but now refurbishment is the main reason for bridging finance. Many investors are making profits by improving buildings and selling after refurbishment work has been completed.