The year started strongly, with contributors completing £278.8 million of bridging loans in Q1 2023, the highest level of loans transacted in a single quarter
A record £831 million of bridging loans was transacted by Bridging Trends contributors in 2023, a 16% rise on the previous year’s total of £716.2 million.
The year started strongly, with contributors completing £278.8 million of bridging loans in Q1 2023, the highest level of loans transacted in a single quarter. The firms said this was possibly due to borrowers turning to bridging finance amid uncertainty in the mainstream mortgage market after 2022’s mini-Budget.
By the second quarter, momentum cooled with £165.7 million of loans transacted by contributors as borrowers were hesitant to take on debt because of high inflation and mortgage rates. However, volume rebounded and stayed consistent throughout the second half of the year, with an increase to £191 million in Q3 and £195.5 million in Q4.
Bridging Trends combines bridging loan completions from various specialist finance packagers operating within the UK bridging market.
In 2023, preventing a chain break was the most popular reason for securing bridging finance, accounting for 22% of all loans. This surpassed the previous year’s most popular purpose of investment purchase, which accounted for 20% of loans and dropped from 23% in 2022.
Meanwhile, the demand for bridging loans for auction purchases, regulated refinance, and re-bridges rose compared to the previous year.
Regulated bridging continued to extend its market share last year, increasing to 46.3% from 44% in 2022 and 40.8% in 2021, possibly influenced by the rising interest rates and product withdrawals from mortgage lenders, especially in the first half of the year, the firms said.
The annual bridging interest rate rose to an average of 0.87% in 2023, compared to 0.73% in 2022 as lenders fought against rising swap rates for much of the year. This is the highest annual average interest rate logged since 2015 (0.91%).