There was £201.8 million of bridging lender in the second quarter of 2024, outlining that more people are dipping into expensive short-term finance.
Bridging is most commonly used to prevent a chain break, when people are dependent on selling a property to then buy another one.
This lending level is the highest ever Q2 figure, while it represents an increase of 2.9% on Q1’s gross lending total of £196.2 million.
Andre Bartlett, director at Capital B Property Finance, said: This growth seems to be fuelled by the urgent need to prevent chain breaks in property transactions, especially as the traditional mortgage market faces delays.
“I’ve seen more people turning to auction finance than ever before, taking advantage of undervalued properties, which is an exciting trend.
“The faster processing times for these loans make them an attractive option for those needing quick access to funds. Even amid high-interest rates and economic uncertainties, the market is adapting well, with a notable shift towards unregulated loans and a slight decrease in interest rates and loan-to-value ratios.
“This flexibility and responsiveness highlight the crucial role bridging finance plays in navigating today’s challenging economic landscape.”
The majority of bridging loans taken out in Q2 (23%) were used to prevent a chain break – rising from 19% in.
Demand for auction finance saw the biggest rise, jumping from 9% in Q1 to 14% in Q2.
The rise in bridging loans to prevent a chain break or fund an auction purchase may have contributed to the average processing time falling from 58 days in Q1 to 52 in Q2.
Purchasing an investment asset was the second most popular use of a bridging loan but fell from 21% in Q1 to 18% in Q2 against a backdrop of uncertainty caused by sustained high interest rates combined with an early general election.
Regardless of this, the number of unregulated bridging loans rose from 49% in Q1 to 54.2% in Q2 as landlords and investors adapted to the new normal.
