Homebuyers turn to bridging to overcome unsettled market

Homebuyers utilising bridging loans to overcome unsettled market as lending climbs 20%

The latest market analysis by bridging finance specialists, Apex Bridging, has found that homebuyers have continued to utilise bridging loans in an increasingly unsettled market, with total lending up both quarterly and annually, with the driving reason being the ability to overcome a chain break during the final stages of a transaction. 

The latest data shows that £214.7m was lent via the bridging sector in the third quarter of last year, up 20.3% vs the previous quarter and 12.9% more compared to the same period the previous year. 

This increase comes despite the fact that numerous base rate increases from the Bank of England have pushed the average monthly interest rate on a bridging loan to 0.73%, the highest level seen in 2022. 

With the property market becoming increasingly unsettled, it’s no surprise that the ability to overcome a chain break when buying was the primary reason homebuyers have been increasingly reliant on bridging loans. Bridging loans due to chain breaks have also seen the largest annual increase, up 9% versus the same quarter last year. 

However, it’s those utilising bridging loans for business purposes, auction purchase and unregulated finance that have driven the largest uplift in activity on a quarterly basis, up 5%, 3% and 2% respectively. 

With bridging loans providing a quick, flexible route when securing finance in a turbulent market, Apex Bridging estimates that a total of £733.2m could be lent via the sector come the end of 2022. 

This will not only be by far the highest sum seen since the start of the pandemic, but it would also sit marginally above the 2019 total of £732.7m.  

Managing Director of Apex Bridging, Chris Hodgkinson, commented:

“The landscape has become increasingly difficult regardless of whether you're purchasing as a homebuyer or investing for business purposes. 

As interest rates have climbed, many have found that when it comes to borrowing there simply aren’t the same deal on the table as there were previously. 

This has proved particularly problematic within the residential sector, with chain breaks being the predominant reason buyers are turning to bridging loans in order to rescue an otherwise scuppered transaction. 

While the benefits of bridging come with the compromise of higher rates, this hasn’t acted as a deterrent and we expect to see the sector finish strongly once the scores are on the doors for 2022 as a whole.”