"As some lenders withdraw from the arena with funding line issues, it will be interesting to see whether others in the space are ready and willing to meet it."
Bridging Trends, conducted in partnership with Brightstar Financial, Enness Private Clients, Positive Lending and SPF, found that uncertainty over Britain's position in Europe, as well as the implementation of MCD, depressed bridging loan volumes.
Unregulated bridging loans attributed for 51.5% of all contributor lending in Q2 2016, although the number of regulated loans hit a new high of 48.4% since Bridging Trends launched.
Second legal charge lending decreased to 16% of all loans during Q2 2016, from 17.5% in Q1 2016, which has been attributed to regulatory changes resulting from MCD.
Average LTV levels fell to 47.4% during Q2 2016 from 52.8% in Q1 2016 and the average completion time on a bridging loan application took 46 days, up from 37 days in Q1 2016, as lenders took "a more cautious and conservative approach to lending amid Brexit and MCD".
For the fifth consecutive quarter, mortgage delays was the most popular reason for borrowers accessing a bridging loan, at 30% of all lending.
Joshua Elash, director of MTF, said: “Uncertainty in the run up to the Referendum seems to have contributed to a cooling off of the market. However, though there was a drop in lending volumes in Q2, the latest data has in fact shown a degree of consistency with the same quarter last year, where lending volumes were only 8% higher at £99.11 million.
"Overall, the sector is in good health. Cheaper rates of interest and lower loan to values continue to show that the bridging market is behaving responsibly."
Chris Whitney, Head of Enness Private Clients, commented: “I was surprised to see the average completion time increase again to 46 days. Lenders may need a reminder of the old marketing slogan ‘If it’s not done in 2 weeks it’s just not bridging!’ To be fair, this could be down to short-term funders providing facilities for development which is admittedly a longer process.
“Following the surprise Brexit vote, I expect specialist lenders and brokers to come into their own. Demand will be high and, as some lenders withdraw from the arena with funding line issues, it will be interesting to see whether others in the space are ready and willing to meet it.”
Kit Thompson, Director of Bridging & Development Brightstar Financial, added: “It is no surprise that bridging lending was down for Q2 in the lead up to the referendum, with the fall-out of MCD, stamp-duty changes to BTL and of course, the shock Brexit result. We have to bear in mind that March was a bumper month for the bridging industry as borrowers wanted to beat the stamp-duty changes, followed by inevitably quieter months in April and May.”
