D_Property

Demand for short term loans continued to rise in the last quarter of last year, with more property investors turning to bridging finance in order to fund their property acquisitions.

Figures compiled by The Association of Short Term Lenders from its members show that the value of bridging loans written rose by 26% in the final quarter of 2016, in comparison to Q3.

The year as a whole saw more modest growth, with value of loans written 9.4% greater in 2016 than they were in 2015. Lending in the year totalled £2.83bn, up from £2.59bn in 2015.

Finance

Benson Hersch, CEO of the ASTL, noted: ‘While lending by ASTL members didn’t quite hit £3bn, there are a number of bridging loans that fall under the radar, made by lenders that many people do not know exist, as well as those lenders who are not members, so the actual size of the bridging market is far larger.’[1]

The speedy nature of bridging finance is a main reason for its continued use. Unlike mainstream lenders, which have been wary of increasing short-term and commercial lending after the recession, a bridging lender can provide a real time solution to a funding gap. It does this by making funds available to acquire property in just 24 hours.

As such, investors chose short-term finance in order to avoid delays with their long-term mortgage, which could see a possible lucrative investment opportunity missed.

Increases

Continuing, Hersh said: ‘After a dip in volumes almost across the board in Q3 last year following the referendum, the size of the increase both in the quarter and across the year has overshot even my most optimistic expectations.’[1]

‘I do expect volumes to rise again in the first quarter of this year, however I expect the percentage increase to be lower compared to Q4, as this quarter’s figures very much contrast with the Brexit blues that affected people looking for bridging loans between July and September last year,’ he added.

Source: https://landlordnews.co.uk

February 23, 2017
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Demand from investors leads to rise in bridging loans

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