£432.5m of bridging loans were completed by its contributors in 2015, according to Bridging Trends data, a quarterly publication conducted by bridging lender MTF and Brightstar Financial, Enness Private Clients, Positive Lending and SPF Short Term Finance.
There was £80.5m of bridging loans in Q1 2015, rising steadily to £99.1m in Q2 and £131.7m in Q3, before a slight decline in the fourth quarter to £121.2m, due to a Christmas slowdown.
Second half contributor lending totalled £252.9m, 40.9% higher than the first half as confidence returned to the market following volatility in the wider markets and an earlier slowdown in the run up to the General Election.
First charge loans accounted for over 80% of the market in all four quarters, while the majority of bridging loans completed throughout the year were unregulated, the data shows.
Average Loan-To-Value (LTV) ratios were consistent throughout the year; the highest average LTV reached 50.9% during the third quarter of 2015.
Average monthly interest rates were under consistent downward pressure throughout the year falling to an average of 0.87% in the fourth quarter, down from 0.95% in the first quarter.
Mortgage delays were the most popular purpose for a bridging loan in 2015, rising consistently throughout the year to 44% in Q4 2015, up from 8% in Q1 2015. There was a big jump to 33% in Q2 2015 as uncertainty in the run up to the general election prompted borrowers to tap alternative financing to secure properties. Pressure on banks prompted by increased regulation and volatility in the wider markets also led people to tap bridging finance, amid mortgage delays.
Refurbishment was the second most popular reason for accessing a bridging loan in 2015, according to the data.
Paul McGonigle, managing director of Positive Lending, said: “The report makes interesting reading, particularly the average interest rate reduction in Q4. Our regulated business is higher than the average on the report and in the regulated world the average rate to customers has remained static and we have reached more customers with incentives such as free up front valuations, paid for by Positive Lending.
“The report would suggest that now we are starting to see rates reduced in the unregulated market too which has spiked an upsurge of unregulated completions. This is particularly pleasing and I would assume that as rates reduce across both spectrums of lending bridging activity will continue to increase.
“This is vitally important too as the unregulated market will see challenges in SDLT from HMRC which will have an impact on landlords’ residual deposits for investment purchases.”