Latest figures compiled by auditors from data provided by members of the Association of Short-Term Lenders (ASTL) has revealed that bridging completions fell last year, but applications increased.
Completions were £2.88bn in 2020, down from £3.99bn in 2019, a fall of 27.9%. while applications increased by more than 11% on the previous year.
Bridging loan books dropped to £4.48bn, a decrease of 2.5% on the previous year. The value of applications in 2020 increased to £25.82bn, up from £23.19bn in 2019.
A growth in applications in Q3 2020 drove a 34.9% increase in completions in Q4, with £918m of completions during the quarter. Applications in Q4 2020 were at £6.69bn, down by 12.7% on Q3, but they were still up by 22.9% on the same quarter in 2019. Average LTVs fell slightly in Q4 and have now dropped to below 59%.
The value of loans in default in Q4 2020 increased by 13.9% on Q3 and was 23.8% higher than the same period the previous year as borrowers continued to feel the financial impact of the pandemic.
Vic Jannels (pictured), CEO of the ASTL, said: “The Q4 lending figures give us an opportunity to review the performance of 2020 as a whole. Completions were down on the previous year, which is to be expected given the periods of national lockdown. However, applications were actually higher than in 2019, which reflects the enormous potential the bridging market has to provide customers with a funding solution through these difficult times.
“We must, however, remain cautious. The effects of economic slowdown are starting to be reflected by the value of loans in default and, while the roll out of the vaccine for Covid-19 continues at pace, a return to normal levels of economic activity seems unlikely before the summer, so these trends may persist for several months.”