The top use for bridging finance in Q1 2026 remained the purchase of an investment property, according to a report.
This use of bridging finance for property purchases accounted for 22% of all transactions, showing no movement from Q4 last year, according to the latest Bridging Trends report from MT Finance.
It found that the share of unregulated bridging loans moved from 56% in Q4 2025 to 59% in Q1 this year, marking the highest level since the final quarter of 2021, when it reached 64%.
First charge loans rose from 89% of total bridging loans advanced in Q4 2025 to 91%, which the report noted is the joint-highest it has been since Bridging Trends records began in 2015. It said this reflected a concentration on purchases, reflected in a nosedive in the demand for finance to fund heavy refurbishments and business injections. These dropped from 11% and 8% in Q4 last year to 6% and 4% in Q1 this year respectively.
The proportion of bridging loans used to fund unregulated finance more than doubled from 5% in the prior quarter to 11%, which the report attributed to borrowers potentially waiting for more favourable rates before switching to longer-term deals.
The total amount transacted in bridging loans by contributors to Bridging Trends was £199.2m over the quarter, a small drop from £199.9m in Q4. The average loan to value (LTV) decreased from 56% to 52% over the same period, as did the average monthly interest rate – which experienced a marginal decrease from 0.83% to 0.82%.
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The report noted that 12 months was still the average term for a bridging loan, although the average completion time rose by one day to 53 days in Q1 this year.
Market is ‘resilient’
Sonny Gosai, bridging and commercial director at Brilliant Solutions, said: “Q1 2026 highlights a bridging finance market that remains resilient and increasingly selective. While contributor gross lending held firm at nearly £200m and first charge lending continued to dominate, the data shows borrowers prioritising speed, security and investment-led opportunities.
“Investment purchases remained the leading use of bridging loans, while demand shifted away from heavy refurbishment and business-purpose borrowing, reflecting a more cautious but opportunity-driven market landscape.”
Chris Oatway, CEO of LDN Finance, added: “Investor confidence remains strong, but the standout trend is the reduction in average LTVs, which suggests lenders are becoming more cautious amid ongoing global and economic uncertainty. The market is clearly favouring lower-risk transactions, with borrowers and lenders alike prioritising straightforward acquisition and refinance deals over heavier refurbishment projects where construction costs, programme delays and sales tail risk create greater exposure.”
Raphael Benggio, bridging director at MT Finance, said: “It is encouraging to see that bridging lending remained stable going into 2026. Investors and landlords in particular seemed to be maximising bridging’s potential in Q1 and the dip in LTV shows that borrowers were careful about not overburdening themselves.”
Benggio added: “We will have to wait and see to get a real measure of how the conflict in Iran has affected the market but the bridging sector will continue to offer solutions to landlords, business owners and homeowners alike.”
Shane Chawatama, sales director at Knowledge Bank, said: “These search trends within bridging highlight a clear shift in investor behaviour. While interest in first-time landlord scenarios has fallen significantly, we’re seeing notable growth in areas such as development exits and Grade II listed properties.
“The rise in development exit searches, in particular, suggests that more investors are actively seeking to maximise value through refurbishment or redevelopment before refinancing or sale. This is mirrored in the increase in searches around listed buildings, where there is clear potential to add value, albeit alongside tighter planning and renovation restrictions.
“Together, these trends point to a market that is becoming more strategic, but also one that must navigate the ongoing challenges of upgrading existing housing stock, particularly in the context of evolving EPC requirements and regulatory pressures.”