Bridging loan interest rates at lowest level since 2015

Bridging loan interest rates fell from 0.80% in Q4 2018 to 0.74% in Q1 2019, its lowest level since 2015 according to the latest Bridging Trends data.

The quarterly data developed by bridging lender MT Finance found that the boost in regulated lending in the past three months was responsible for this decline.

LTV’s also decreased to 51.3% in the first quarter of this year, which is a 5.7% decrease from Q4 2018.

Bridging loan volume reached £185.32m in Q1 2019 which is a 20% year-on-year increase, whilst the most popular reason for taking out a bridging loan was for the purchase of an investment property.

Chris Whitney, head of specialist lending at Enness, said: “As rates come down, short-term loans become a financially viable way of financing for more and more situations so actually increases business into the sector in my view.

“In terms of volume I think we see more demand for higher LTV’s across the board, but the average LTV is possibly dragged down by larger transactions at low levels.”

The average term of a bridging loan remained at 12 months during the first quarter of this year, with the completion time of 40 days during Q1 2019 being lower than the average completion time of 42 days during Q4 2018.

Whitney added: “Our buy-to-let team have reported that there has recently been a drop in service standards from buy to let lenders and loans are taking much longer to be agreed and complete.

“Borrowers are generally getting what they want but just not quickly enough which I think is reflected in the report’s reasons for bridging.”

Regulated bridging loans increased for the first time since Q1 2018, with the number of regulated loans conducted by contributors increasing to 38.3% in Q1 2019.

Gareth Lewis, commercial director at MT Finance, added: “Property investors are continuing to turn to bridging finance as a support tool, as reflected in the 22% utilising the product for investment purposes.

“With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those property investors who are looking to expand their portfolio and need certainty when conducting their business and who often need to move swiftly to capitalise on an opportunity.”

This data comes as two new contributors join Bridging Trends; Impact Specialist Finance (previously AToM), and UK Property Finance.

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