Bridging loan statistics just released by Monopoly Finance, a large bridging loans provider has once again confirmed that gross bridging finance lending has more than doubled during the last 12 months!
The figures provided demonstrate that bridging lending is growing quickly and much of this growth is due to the strong demand for finance in the property investment market. In particular, this is in the residential buy to let market rather than the retail buy to let sector.
Despite investment property lending through buy to let mortgages and commercial mortgages still being much less than half what it was, there is certainly strong growth in this finance sector. This is being caused because many people who are unable to secure a residential mortgage due to the tighter lending criteria for mortgages, have to find rented accommodation instead. The number of people requiring rented property has grown sharply and a shortage of residential property to rent has led to an increase in rents being charged by landlords. These higher rents combined with depressed property values, has led to a surge in the number of people looking to purchase residential letting property, in order to make the most of the high rents that can be earned, whilst also taking advantage of the low property prices to pick up what is considered to be a great long term investment.
This surge in the demand for rental investment property has led to significant growth in bridging lending. As more people require bridging finance to help them quickly pick up bargains and to carry out renovation work, before selling property onto property investors and landlords for a quick profit, or to refinance using a long term finance option, typically through a buy to let mortgage.
The bridging statistics have also shown that the average size of a bridging loan has also increased, which demonstrates that people are starting to use bridging loans to finance larger projects. In addition, the loan to values for the bridging facilities has also increased, which demonstrates that bridging providers are becoming more optimistic about the future of property values. Finally, the figures also illustrate that the average monthly interest rate for bridging finance has decreased, which could be due to the average loan size increasing, but is also undoubtedly due to increased completion in the bridging finance sector, as more lenders enter the market and existing bridging providers look to increase their market share.
Although there is a lot of negative news about the state of the British economy, there are many positive signs and increased confidence is being seen in the property market.