MT Finance’s Bridging Trends aggregates data from a number of UK bridging finance specialists: AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Finance and UK Property Finance, with Knowledge Bank providing insights into broker search criteria.
In 2023, the primary use for bridging loans was to prevent property chain breaks, accounting for 22% of all loans and overtaking investment purchases as the most popular reason for bridging finance.
The sector also saw growth in demand for auction purchases, regulated refinance, and re-bridges. Regulated bridging loans increased their market share to 46.3%, up from 44% in 2022, a rise attributed to heightened interest rates and the withdrawal of products by mortgage lenders, especially in the year’s first half.
The annual average bridging interest rate climbed to 0.87% in 2023 from 0.73% in 2022, reaching its highest since 2015, while the average loan-to-value ratio remained steady at 57%, indicating cautious borrowing amid the rate hikes. The data also showed a shift towards first charge loans over second charge, with the latter’s market volume dropping to a record low of 10.9%.
Completion times for bridging loans slightly decreased to 58 days from 59 days in 2022, yet this was still higher than in 2021, reflecting the sector’s growing demand. The average loan term stood at 12 months for the seventh consecutive year, underscoring the bridging finance market’s stability amid fluctuating economic conditions.