Bridging applications jumped by more than a quarter to hit £7.49bn in the first quarter of the year, according to data from the Association of Short-Term Lenders.

New loan applications lifted by more than 25.5% in the first three months of 2021, compared to the same period a year ago, which the body says demonstrates “increased demand from customers”.

The data shows that the value of new bridging applications in the first quarter of the year was 12.0% higher than the final quarter of last year.

These figures are compiled by auditors from data provided by members of the ASTL.

Completions in the first quarter of this year fell by 1.9% in the final quarter of 2020 but were up by 10.7% on the same period last year.

In the 12 months to 31 March 2021, completions were down by 24.1% on the previous year, which the ASTL says reflects “the period of low activity during last year’s lockdowns”.

However, the value of bridging loan books slipped to £4.4bn at the end of the first quarter of this year, a decrease of 1.7% on the previous quarter and down by 3.5% on the same period last year.

The body adds that the value of loans in default fell by 4.5% compared to December 2020. It says the value of loans in default is now just 2.2% higher than March 2020.

ASTL chief executive Vic Jannels says: “The first quarter lending figures reflect the story we are hearing from the market, that everyone is busy with new business applications.

“In fact, the value of applications in the first quarter of 2021 was more than a quarter higher than the same period in 2021, which was mostly unaffected by the Covid pandemic.

“The value of completions remains relatively steady, which means we are seeing an increasing number of bridging loan applications that are not progressing through to completions.

“This is likely to be a combination of more rigorous underwriting by lenders, brokers hedging their bets by submitting multiple applications to multiple lenders and some cases where bridging is no longer required by the time of the completion date.

“We should keep a watchful eye on this trend as a decreasing conversion rate for loans benefits nobody in the process.

“On a more positive note, the value of defaults decreased on last quarter and is only a little higher than it was at the start of the pandemic.

“This reflects the hard work of all of our members in working with their existing customers over the last year and, with positive signs for the economy ahead, we have reason to believe that this trend can continue.”