According to the latest Bridging Trends report, total bridging loan transaction completions for Q1 came out at £156.78 million - a significant increase of around 8.5% compared to the same period last year.

Evidence suggests that more borrowers than ever before are using bridging finance to speed up and simplify property transactions, avoiding the complications and delays involved in arranging a traditional mortgage.

For four quarters in a row, the top reason for bridging finance in Q1 this year was purchasing an investment property - 26% of all bridging loans issued were used for this purpose. Second in line was bridging finance for speeding up property purchases, accounting for 23% of all loans issued during this period. 

The costs of taking out a bridging loan also decreased during the first three months of the year - down from 0.77% at the end of last year to a new average of 0.71%. Demand for regulated bridging loans is also on the up, which accounted for 43.9% of all loans issued - up from just 36% in Q4 2021. 

Interestingly, bridging loans for business purposes saw the greatest decrease in demand, accounting for just 10% of transactions in Q1 2022, down from 15% at the end of last year.

Borrowers Continue To Seek Innovative Alternatives

Speaking on behalf of Sirius Property Finance, Head of Corporate Partnerships, Kimberley Gates, expressed little surprise in the stellar performance of the bridging sector in 2022 so far.

“It comes as no surprise that bridging loan transactions have increased again from the previous quarter – the property market continues to be turbulent for a variety of well-publicised reasons so borrowers are looking for increasingly innovative ways to structure their debt,” she said. 

“The stigma surrounding bridging also continues to subside as more investors, developers and homeowners are starting to see it as a useful tool for realising their real estate goals and no longer as a last resort.”

Likewise, Head of Bridging at Clifton Private Finance, Sam O’Neill, spoke with confidence about the direction the sector as a whole is heading in:

“It’s good news across the board…increased borrowing and lower rates – what’s not to like? Gross lending being substantially up isn’t a surprise, looking at our figures, enquiries are up, applications are up, and completions are up,” he said. 

“The increase in chain break transactions and regulated bridging is another positive sign. An increasing number of homeowners are seeing bridging finance as something they can confidently rely on and trust as a viable financial product. When looking for reassurance that the industry is going in the right direction, we can’t ask for more positive feedback than that.”

Cash Is King

Dale Jannels, MD at Impact Specialist Finance, highlighted the important role bridging finance is playing in helping homeowners opt out of traditional property chains and complete transactions without the usual delays or complications. 

“This latest Bridging Trends [report] highlights more than ever that cash is king,” he said.

“This applies to homeowners wishing to get their offer accepted before they have sold their own property, as well as investors wanting to raise funds quickly to invest in stock or refurbish existing to achieve better yields for example.”

“The shortage of suitable housing stock will undoubtedly drive increased volumes in the bridging sector for the foreseeable future.”