Bridging loans fell 5.3% to £1.3bn in the second quarter of the year compared to the previous three months, says the Association of Short Term Lenders shows, even as loan books hit record highs.  

It adds this “drop was reflected in applications”, which were down 5.9% and valued at £9.2bn in the three months to the end of June, compared to the previous quarter.  

The association says its survey highlights “an uncertain economy and faltering property market”.  

Average loan-to-value ratios slipped to 57.8% in the second quarter, from 59.3% in the prior three months, says the body, which compiles its data through auditors from numbers provided by members.  

However, the group adds that member firm’s loan books grew more than 5% to an all-time high of just over £7.1bn in the three months to June.  

Association of Short Term Lenders chief executive Vic Jannels says: “The short-term lending sector continued to demonstrate its versatility and resilience in the second quarter of this year, during which period members combined loan books have exceeded £7bn for the first time.  

“While applications and completions were slightly down on the previous quarter, they were both higher than the same period last year.   

“Given that we are still faced with the vagaries of an uncertain economy, and faltering property market, this represents another very strong performance.  

“We cannot ignore the wider economic environment, which is putting greater pressure on exit strategies and so it’s important that lenders continue to take a robust approach to underwriting to help ensure the market continues to grow in a cautious and sustainable way.   

“In doing this, the market will be well placed to help even more customers to finance transitional periods in the future.”