Featured in Mortgage Finance Gazette:
There has been a 46% increase in gross
bridging loan volumes in Q3 2020, as the sector recovers from the Covid-19
lockdown. According to the latest Bridging Trends reports regulated
transactions continued to dominate the sector while the average interest rate
fell in line with pre-Covid-19 levels.
There was also a rise in demand for regulated
refinance, according to the quarterly report produced by short-term finance
lender, MT Finance. The report revealed contributor lending transactions
totalled £115.52 million in the third quarter of 2020.
Although lending figures were 35% below the
pre Covid-19 levels of £180.94 million, they had risen significantly (46%) from
the £79.4 million of bridging loans transacted in the previous quarter. This
highlighted the impact of Covid-19 restrictions being eased.
MT Finance’s report showed regulated bridging
lending continued to dominate the sector in Q3 at an average of 53% of all
lending, compared to 47% of unregulated transactions. It said the average
weighted monthly interest rate in Q3 decreased to 0.78% from 0.85% in Q2. This
fell back in line with rates offered before the Covid-19 outbreak (0.75%).
Meanwhile, average LTV levels in the third
quarter increased to 51.7%, from 48.8% in Q2. This was likely attributed to borrowers
turning to bridging finance as mainstream lenders continued to tighten their
maximum LTV restrictions. Demand for second charge lending dropped
significantly, accounting for an average of 17.7% of total market volume in Q3
– down from 26.1% in Q2.
For the eighth consecutive quarter, the
average term of a bridging loan remained at 12 months while typical completion
time increased from 50 to 52. This could be attributed to operational capacity
issues, the report said.
The most popular use of a bridging loan
remained the same as the previous six reports – to purchase investment
property.
Craig Hardiman-Scott, senior associate at
Sirius Property Finance, said: “Customer demand is extremely high, so it comes
as no surprise that the short-term loan market continues to be very buoyant
from developer exits through to business capital injections to name but a few.
“Those with competitive rates, products, and
service that have been able to adapt their offerings throughout the pandemic
are well placed to continue seeing the benefits.” (Mortgage Finance Gazette)
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