Bridging market shows strong performance in Q3 with faster completions and increased lending

By Bridging Loan Directory 12th November 2024

The latest figures from Bridging Trends show a robust third quarter for the bridging finance market, with faster completion times, increased lending volumes and contributor gross lending hitting £220.8million.

Key Points for Q3 2024:

Faster completion times – best performance since Q2 2019
Contributor gross lending up 9 per cent
Investment purchase was the most popular use of bridging loans
Demand for regulated and unregulated refinance jumps to all-time high

The data reveals completion times fell to 46 days in Q3 2024, down from 52 days in Q2, marking the fastest average completion time since Q2 2019.

This is a positive sign that signals improvement in operational efficiency which comes alongside a 9 per cent increase in total gross lending, with contributors recording an increase from £201.8m in Q2 2024 to £220.8m in Q3 2024, continuing the positive upward trend seen throughout the year and demonstrating the market’s resilience during traditionally quieter periods.

Majority of the bridging loans taken out in Q3 were used for investment purchase – rising from 18 per cent in Q2 to 24 per cent in Q3.

This increase suggests growing investor confidence in the market despite Q3 being the summer period.

Demand for regulated and unregulated refinance saw the biggest rise, jumping from 6 to 14 per cent and 6 to 13 per cent respectively.

Decline in chain-break loans suggest a more stable market with fewer disruptions.

Data provided by Knowledge Bank showed that regulated bridging remained the top criteria search made by UK bridging finance brokers in Q3 reinforcing how powerful it is for borrowers.

The proportion of first charge loans in Q3 increased from 88.4 to 91 per cent while second charge loans decreased to 8 per cent from 11.6 per cent.

The average loan-to-value also dropped fractionally, from 59.3 per cent in Q2 to 56.8 per cent this quarter.

Elsewhere, the average term remained at 12 months for the 12^th consecutive quarter.

Bridging Trends combines bridging loan completions from several specialist finance packagers operating within the UK bridging market: 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.

The data for top broker criteria searches is supplied by Knowledge Bank.

Chris Oatway, chief executive officer of LDN Finance, comments:

“Over the past quarter, we’ve seen a notable improvement in the bridging finance sector, with the average completion time reducing significantly, signalling a more efficient market all round.

Additionally, lending volumes have increased by 10 per cent, with a marked rise in investors using bridging finance for new acquisitions.

With bridging finance usage rising, particularly among investors looking to seize new opportunities, there’s a growing sense of optimism.

Looking ahead to Q4 2024, we expect continued momentum, with further growth in lending activity as confidence in the market strengthens.

With the easing of economic pressures and a stable property environment, we anticipate more investors leveraging bridging finance to secure profitable opportunities, suggesting that the market will continue to improve as we close out the year.”

Shane Chawatama at Knowledge Bank comments:

“Over the last quarter, bridging demand has remained exceptionally popular.

The top three searches on Knowledge Bank continue the trend we have seen this year. Regulated bridging, minimum loan amount, and maximum LTV have held steady.

While these three criteria continue to dominate, we’ve also seen increased interest in second charge bridging and adverse credit, underscoring the market’s focus on flexible bridging options, amid the ongoing economic uncertainty continues for customers.

Bridging searches have grown consistently over the past two years, and with housing stock challenges remaining in the residential market, we expect demand for creative funding solutions in property improvements and value-adding projects to stay high.”

Gareth Lewis, managing director of MT Finance, comments:

“The reduction in completion times to a five-year low demonstrates a considered approach from all facets of the market to improve operational efficiency.

This is particularly noteworthy given that we typically see the market soften slightly during the summer months. Instead, we’ve witnessed increased lending volumes and faster turnaround times, indicating a more streamlined process from all parties involved in the bridging transaction chain.

The rise in investment purchases to 24% of total lending suggests growing confidence among property investors, who are actively seeking opportunities in the current market.

These figures paint a picture of a robust and efficient bridging finance sector that continues to meet the evolving needs of borrowers,”