The short-term loans market showed “resilience” in the second quarter of this year, with a growth in application volumes and a cut in interest rates.  

Application volumes lifted 11% to 460 from a year ago and up 2% on the first three months of 2025, according to the quarterly Bridging Trends report compiled by lender MT Finance. 

The rise “indicated sustained market activity and borrower confidence in bridging finance solutions,” the study says. 

Average monthly interest rate for bridging loans fell 5 basis points to 0.81% in the second quarter from three months ago. 

The report adds: “This reduction in borrowing costs can be directly linked to the decrease in base and swap rates and reduced weighted average LTV.  

“The downward trajectory continued the trend from the previous year, demonstrating the sector’s increasing competitiveness and improved cost of capital.” 

However, total gross lending slipped 1% to £199.7m in the period, from both the previous quarter and a year ago. 

“This stability underscores the sector’s resilience and the consistent demand for bridging finance across various market conditions,” the study adds. 

The report noted “a significant” rise in refinance activity, with regulated refinance jumping by 76% to 81 applications in the period from the previous three months. 

Unregulated refinancing lifted 63% to 49 applications in the second quarter from the first three months of the year. 

“Regulated refinance now accounts for the largest proportion of loans by purpose at 18% in the second quarter, up from 10% in the first quarter of 2025,” the survey adds. 

First charge loans made up 10% of loans in the second quarter, while second charge loans continued to dominate, accounting for 90% of the market.  

The average loan-to-value remained consistent at 54% and the average loan term stayed consistent at approximately 12 months. 

MT Finance deputy chief executive Gareth Lewis says: “The latest Bridging Trends report highlights a resilient market adapting to current economic conditions.  

“The reduction in interest rates, combined with consistent application volumes, suggests a healthy appetite for bridging finance.  

“We are also seeing a clear shift in loan purposes, with refinance and auction purchases playing an increasingly significant role.  

“We expect continued sector stability and favourable market conditions throughout 2025 as lenders continue to improve operational efficiency on all fronts.” 

Impact Specialist Finance managing director Dale Jannels adds: “We’re seeing several new brokers placing clients in the bridging market. 

“Every day is a learning day, but now more brokers are exploring and educating themselves on the many benefits that bridging can bring to their client banks.”