"For the fourth consecutive quarter, mortgage delays were the most popular reason for accessing a bridging loan, at 42% of all lending."
The data was conducted by MTF in conjunction with specialist finance brokers Brightstar Financial, Enness Private Clients, Positive Lending, and SPF.
It found that unregulated bridging loans continued to outperform regulated bridging loans, though the number of regulated loans increased from 35.9% in Q4 2015 to 42.5% in Q1 2016.
For the fourth consecutive quarter, mortgage delays were the most popular reason for accessing a bridging loan, at 42% of all lending in Q1 2016, a slight drop from 44% during Q4 2015.
Second legal charge lending for the quarter rose from 9.56% during Q4 2015 to 17.5%.
Average LTV levels climbed from 49.9% in Q4 2015 to 52.8% in Q1 2016, and average monthly interest rates hit 0.89%, an increase of 0.02% on the previous quarter.
The average completion time on a bridging loan application decreased by 4 days. For the third consecutive quarter, the average term of a bridging loan remained at 10 months.
Joshua Elash, director of bridging finance lender MTF, said: “It is positive to see an increase in the gross lending volumes and although there has been upward movement on both the weighted average interest rates and LTVs, both continue to suggest that the market is healthy for consumers and is behaving responsibly.”
Kit Thompson, Director of Bridging Loans at Brightstar, commented: “Once again the biggest reason for someone taking out a bridging loan is because of delays with their long term mortgage. This is shocking and causes unnecessary costs for borrowers. It is always a surprise to me that a mainstream mortgage takes such a long time to complete given that so much of the process is now automated at so many lenders, whereas a bridging loan which is underwritten individually on a case by case basis can be completed in under forty days. While it is full credit to the bridging industry that they can rise to the challenge to ensure that people do not lose the opportunity to buy their new home, it is surely time that mainstream mortgage lenders did likewise.”
Chris Whitney, Head of Specialist Lending at Enness Private Clients, added: "'Steady as she goes' is probably quite healthy for lenders and borrowers alike, but not great for news headlines. However, I think the focus on the Brexit vote has now intensified so it will be interesting to see what impact that has on the next set of data. Market sentiment is mixed on the impact it will have- I think not in terms of the outcome itself, but more to do with the uncertainty the vote brings.
“Mortgage delays are yet again the biggest single reason for a short term facility and this still surprises me. Perhaps they aren’t ‘delays’ as such and the mortgage market just can’t meet the timing expectations of the borrower, and the short term finance solution allows the transaction to happen in a timely manner. Some cases might be genuine ‘delays’ but I suspect that many could well be just a general mismatch of ‘normal mortgage timings’ and the desire/expectation of the borrower."
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