For the second consecutive quarter the most popular use of a bridging loan was to purchase investment property, according to the latest Bridging Trends report.
It contributed 25% of all lending in Q2 2019, up from 22% during Q1 2019.
A traditional chain-break was the second most popular use for bridging finance in the second quarter, contributing to 18% of all lending. Meanwhile, bridging loans for business purposes increased to 12% – up from 8% in Q1 2019.
Bridging Trends groups together the figures from lender MT Finance and specialist finance brokers Brightstar Financial, Clever Lending, Complete FS, Enness, Impact Specialist Finance, Positive Lending, Pure Commercial Finance, Y3S, and UK Property Finance.
Bridging growth stabilised in the second quarter, with bridging loan volume transacted by contributors hitting £184.82 million, a £500,000 decrease on the previous quarter (£185.32m).
Average LTV levels increased by 1.55% in the second quarter to 52.85%. The average monthly interest rate in Q2 was 0.79%, representing an increase of 0.05% on the previous quarter.
The number of regulated loans transacted by Bridging Trends contributors decreased from 38.3% in Q1 2019, to 37.5% in Q2 2019. However, second charge loan transactions saw a slight increase in Q2, up from 18.3% in the previous quarter, to 18.7%.
For the third consecutive quarter, the average term of a bridging loan remained at 12 months. The average completion time on a bridging loan application in the second quarter increased by four days to 44.
Dale Jannels, managing director at Impact Specialist Finance, said: “I’m not surprised that chain break finance was the second most popular reason for obtaining bridging finance in the last quarter. We’re in uncertain times and this uncertainty transfers into property transactions also.
“Customers are also being gazumped and looking for short-term finance assistance to speed up the purchase of their dream property. Add in the complexity of many property transactions and the high-street lender will say no, yet short-term finance might get them over the initial line.”