Overall gross lending was up 0.4% when compared to the last three months of 2023. The most significant increase was in demand for bridging loans for business funding. These proportion of loans for this purpose almost doubled from 8% in Q4 2023, to 15% in Q1 2024 — the highest it has been since Q4 2021.

The most common reason for arranging a bridging loan was to purchase an investment asset, accounting for 21% of loans in the quarter. This was down from 24% in Q4 2023.

However there was an increase in bridging finance to prevent a chain break in the property market. This was the second most popular purpose for obtaining bridging finance over the quarter, rising to 19% from 16% in the previous quarter.

With conveyancing delays leading to protracted home purchase transactions and the potential for a greater number of broken chains, more homeowners are turning to bridging to secure the home they want to buy.

This has seen the number of regulated bridging loans increase from 44.2% in Q4 2023 to 51% in Q1 2024 – the highest it’s been since Q3 2020, where it stood at 53%.

Data provided by Knowledge Bank also revealed a demand for regulated bridging as it remained the top criteria search made by UK bridging finance brokers in the first quarter of this year.

The increase in regulated bridging also likely influenced the drop in the average monthly interest rate, which dropped from 0.91% in Q4 2023 to 0.89% in Q1 2024.

Additionally, a growing number of borrowers turned to bridging finance to leverage equity in their assets in the first quarter of the year, as demand for second charge bridging reached a three-year high of 21.3% in Q1, compared to 11.6% in Q4 2023. It previously stood at d 22.2% in Q1 2021.

Elsewhere, the average loan-to-value (LTV) came it at 60% in Q1, rising fractionally from 59.3% in Q4 2023. The average completion time for a bridging loan remained at 58 days.  For the tenth consecutive quarter, the average term of these bridging loans was 12 months.

Siruis Finance group chief operating officer William Lloyd-Hayward says: “The latest Bridging Trends data is yet another reminder of the resilience and versatility of the bridging sector. Overall lending continues to grow, and the diversity of this growth is striking.

“Demand from businesses for short-term property funding, for example, has doubled, while homeowners are increasingly turning to bridging, with the regulated part of the market jumping to pre-pandemic levels. At the same time, second charge bridging loans have hit a three-year high.

“The overall picture demonstrates that more brokers and borrowers are recognising bridging as a flexible solution to meet a wide variety of capital challenges – and this is a positive sign for the future growth of the sector.”

MT Finance managing director Gareth Lewis adds: “With momentum maintained in the first quarter, it’s clear that borrowers are continuing to turn to bridging lenders. Second charge bridges in particular have come to the forefront and show how brokers are working with their clients to maximise the equity in their properties without disturbing their current mortgages.

“I would not be surprised if this jump in second charges is also linked to the rise in regulated bridging, allowing homeowners to take out a cross charge and secure their dream home.”

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