Over a third of all lending in the second quarter of 2018 was for refurbishment purposes, which was a dramatic rise from 18% in the first quarter of the year. This time last year saw a similar spike in bridging loans being used for this purpose.
Data suggests that investors are opting for birding loans to make improvements to properties and bolster yields against a backdrop of legislation that has made it tougher to buy new properties.
As a result of the uplift in refurbishment, bridging loans for mortgage delays and auction purchases were down on the previous quarter, falling by 4% and 13%.
Bridging loan volumes transacted by contributors to Bridging Trends hit £197.94 million in the second quarter of 2018 – this is an increase of £43.9 million on the previous quarter and the highest figure to date.
Regulated bridging loans fell to the lowest level since 2015, coming in at 36.8% of lending in Q2, from 43.7% in Q1. However, second charge lending increased to 19.1% of all loans during Q2, up from 16.3%. Average LTVs levels increased by 7.8% in Q2 to 56.9%, whilst the average monthly interest rate remained at 0.83% for the third consecutive quarter. The average term of a bridging loan in Q2 remained at 11 months.