Bridging loan transactions totalled £196.2m in the first quarter of 2024, according to the latest Bridging Trends data.

This continued the momentum from Q4 2023, when bridging loan transactions reached £195.5m.

Bridging Trends is a quarterly publication developed by short-term finance lender, MT Finance, to offer a general snapshot of the bridging finance sector.

The figures combine bridging loan completions from several specialist finance packagers operating in the UK bridging market, which include AFIG, Brightstar Financial, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Commercial, Sirius Finance and UK Property Finance. The data for top broker criteria searches is supplied by Knowledge Bank.

In Q1, borrowers utilised bridging finance mostly to purchase investment assets in Q1, accounting for 21% of loans, down from 24% in Q4 2023.

However, the demand for business funding saw the most significant increase, almost doubling from 8% in Q4 2023 to 15% in Q1 2024 – the highest it has been since Q4 2021. This rise could potentially be attributed to business owners seeking market certainty to grow their companies.

Group chief operating officer and managing director at Sirius Finance, William Lloyd-Hayward, said that the latest data is a “reminder of the resilience and versatility” of the bridging sector.

“Overall lending continues to grow, and the diversity of this growth is striking,” Lloyd-Hayward added. “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.”

Preventing a chain break was the second most popular purpose for obtaining bridging finance in Q1, 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 have turned to bridging to secure the home they want. 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 53% in Q3 2020.

Knowledge Bank’s data also revealed a demand for regulated bridging as it remained the top criteria search made by UK bridging finance brokers in Q1. This increase in regulated bridging also likely influenced the drop in the average monthly interest rate, which fell from 0.91% in Q4 2023 to 0.89% in Q1 2024.

Managing director at MT Finance, Gareth Lewis, added: “What happens in the next quarter in the run-up to the election is hard to guess but regardless of what happens, I know I speak for everyone in the specialist finance industry when I say we remain committed to our clients and delivering the best outcome as quickly as possible.”

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