Homebuyers are continuing to utilise bridging loans to overcome financial hurdles in the property market, analysis from Apex Bridging has shown.

Latest figures have revealed that £214.7m was lent via the bridging sector in the third quarter of last year, a total up 20.3% compared to the previous quarter and 12.9% compared to the same period in 2021.

This increase also comes despite the fact that numerous base rate increases from the Bank of England last year pushed the average monthly interest rate on a bridging loan to 0.73%, the highest level seen in 2022.

Apex Bridging suggested the driving reason behind the rise in bridging finance has been the ability to overcome a chain break during the final stages of a transaction, a trend that has seen a 9% increase compared to the same quarter in 2021.

Those utilising bridging loans for business purposes, auction purchase and unregulated finance that drove the largest uplift in activity on a quarterly basis, each up by 5%, 3% and 2% respectively.

Furthermore, Apex Bridging has estimated that a total of £733.2m could be lent via the sector by the end of 2022. This would be the highest sum seen since the start of the pandemic, and would even sit marginally above the 2019 total of £732.7m.

“The landscape has become increasingly difficult regardless of whether you're purchasing as a homebuyer or investing for business purposes,” commented Apex Bridging managing director, Chris Hodgkinson. “As interest rates have climbed, many have found that when it comes to borrowing there simply aren’t the same deal on the table as there were previously. 

“This has proved particularly problematic within the residential sector, with chain breaks being the predominant reason buyers are turning to bridging loans in order to rescue an otherwise scuppered transaction. 

“While the benefits of bridging come with the compromise of higher rates, this hasn’t acted as a deterrent and we expect to see the sector finish strongly once the scores are on the doors for 2022 as a whole.”

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