Half of brokers see rise in bridging loan volume
Demand for bridging loans increased in the third quarter of 2018, despite the traditional summer slowdown.
Demand for bridging finance grew in the third quarter of 2018, with almost half (48%) of brokers experiencing a rise in bridging loan volume, up from 38% in the second quarter of 2018, according to the latest Broker Sentiment Survey conducted by bridging lender, mtf.
A mere 17% of brokers did not experience a rise in bridging loan volume in Q3 2018.
Feedback from brokers points to a strong need for specialist lending. However, the geographical spread of bridging loan demand narrowed in the third quarter the year, with demand in the North West, South West and Scotland dropping off from the previous quarter.
The South East saw the biggest demand for bridging loans in the UK at 48%, up from 30% in Q2. The second highest area of demand was London, at 41%.
For the third consecutive quarter, funding development projects was the most popular reason for taking out a bridging loan at 31%. Business purposes was the second most popular reason at 21%, up from 16% in the second quarter of 2018.
However, two thirds (66%) of brokers said the bridging loan process is longer than it was 12 months ago.
With the majority (48%) suggesting 3-4 weeks was the average length to complete a bridging loan. While 21% indicated that bridging loan cases generally took 2-3 weeks to complete.
61% of the 113 brokers surveyed blamed solicitors as the main reason for delays, followed by the valuer at 16%.
Gareth Lewis, pictured, commercial director, mtf comments:
“The bridging finance industry is in promising shape and demand continues to grow, particularly from property investors looking to fund development projects in London and the South East.
“However, speed has always been a vital element in bridging finance and it is essential we don’t lose sight of this. It is important that all parties involved- the lender, lawyer, valuer and the broker, move swiftly to complete to the borrower’s schedule.
“It is important we stay true to the fundamentals of bridging: providing borrowers with fast access to the capital they need in a responsible and sustainable way and not fall in to the more traditional computer banking model.”