Demand from investors leads to increase in bridging loans

Demand for short-term loans continued to increase in the first quarter of the year, with more property investors turning to bridging finance in order to fund their property acquisitions.

The latest Broker Sentiment Survey conducted by bridging lender mtf shows that there was a significant increase in the number of bridging loans issued during the first three months of the year, with 59% of brokers experiencing a rise in bridging loan volume, up from 31% in the final quarter of last year.

Bridging finance is increasingly being used as a viable financial tool to provide real time funding to plug any gap before longer term finance can be put in place.

The largest rise in demand for bridging loans in the UK was in the South East of England at 40%, up from 29% in the final quarter of last year. The second highest area of demand was London, at 30%.

Some 30% of bridging loans secured in Q1 was to fund a development project, followed by the purchase of an investment property, at 20%. Demand for financing investment purchases grew from 6% in Q4, showing healthy appetite from buy-to-let landlords to take on new properties, despite recent changes to tax relief.

Some 45% of the 100 brokers surveyed said competition was the key issue currently facing the bridging finance sector, while 30% cited delays, followed by regulation at 15%.

James Anderson, head of new business at mtf, commented: “The feedback from brokers points to a strong need for specialist lending, particularly from developers who continue to support the housing market by providing further supply to meet the ever-constant demand.”


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