The total volume of bridging lending transacted last year came to £455m last year, a 38 per cent drop on 2019’s £732.7m figure, says MT Finance in its latest bridging trends report.
Further changes in the market included the split between regulated and unregulated transactions changing significantly – from regulated loans making up 39 per cent of gross lending in 2019 to 49.4 per cent in 2020.
And average monthly interest rates went through changes too – in Q2 they peaked at 0.85 per cent only to drop to the lowest rate recorded since MT Finance’s report started in 2015 – 0.72 per cent.
As well as this, the average LTV fell to an average of 50.7 per cent last year as compared to 52.9 per cent in 2019.
In the first three quarters of the year, the report adds, funding an investment purchase was the main reason for seeking bridging finance. In the final quarter this changed to dealing with a chain break, which made up 23 per cent of all transactions.
Impact Specialist Finance managing director Dale Jannels says: “The impact of the pandemic on the bridging sector is shown clearly in Q4’s data, but it also alludes to the activity we are now experiencing, some of which, but not all, is related to the stamp duty holiday deadline.”
And he believes that next year will see more bridging business: “It’s clear though that bridging finance is becoming better understood by the wider broker market (not just those in the specialist sector) and there is more confidence about the options it can provide customers, which should mean that 2021 could see a real watershed moment for this type of finance.”
Enness head of specialist lending Chris Whitney agrees: “As the trend in Q3 and Q4 indicated, we believe volumes will bounce back quite quickly and with people re-entering the market the data is reflecting the stiff competition lenders face for business in terms of lower interest rates.
As does Clever Lending head of operations Kevin Blount, who says that the stamp duty holiday “Helped to bring business to the bridging market, which is continuing into 2021.”
MT Finance commercial director Gareth Lewis comments: “After the first lockdown, we saw the re-emergence of some larger lenders and if you combine this with the stamp duty changes, it is no surprise that there was a stimulus on rates and regulated bridging in the latter part of the year.
“As the vaccine rolls out and we gradually emerge from this lockdown, I believe we will see a new transactional flow from renewed confidence in the economy and businesses re-establishing themselves.”
