The total volume of bridging loans has increased during Q3 of 2018. In fact, about half of all brokers experienced an increase in bridging loan inquiries. However, this increase was not experienced in all regions of the United Kingdom.
More Property Development in London and the South East
About 48% of brokers noticed an increase in bridging loan volume. However, 17% claim to have not experienced any increased demand. These varied results are connected to the increased demand in specific regions and the decreased demand in other areas.
The areas that experienced the largest increase in bridging loans include London and the South East. During the second quarter of 2018, the South East accounted for just 30% of bridging loans in the UK. For the third quarter of 2018, 48% of loans were for projects in the South East. London came in second with 41% of bridging loans. Scotland, the South West, and the North West experienced the biggest decreases.
Most of these bridging loans were needed to fund development projects, accounting for 31% of all bridging loans. Business purposes accounted for 21%, which is an increase compared to the 16% it held the previous quarter.
Overall, the total volume of bridging loans increased by over £15 million. However, regulated bridging loans decreased, signalling a decrease in residential property transactions. During this same period, new property development and commercial property refurbishment continued to increase.
The Completion Times for Loans Are Continuing to Increase
Along with an increased demand for bridging loans, most brokers noticed that the completion times for bridging loans are increasing. In fact, 66% of surveyed brokers believe that the process of obtaining a bridging loan takes longer compared to the same time last year.
About 48% of brokers believe that bridging loans tend to take about three to four weeks to complete. 21% of brokers claim that bridging loans typically take two to three weeks to complete. These surveys may reflect the differences in the property market across the United Kingdom.
According to previous data, the average completion time for a bridging loan in 2017 was 43 days. For the third quarter of 2018, the completion time has increased to 46 days, which is over six weeks.
Brokers provide different reasons for this increase. 61% of brokers believe that the increase is due to solicitors taking longer whilst 16% believe that the valuer is to blame. According to the groups that conducted surveys of the bridging loan market, the recent increase is mostly due to the number of employees taking their annual leave.
Regardless of the reason for the increased completion times, most brokers agree that lenders, lawyers, and valuers all need to work quickly to complete these loans. An increased demand for bridging loans may lead to even more delays, which may offset increases in the speed of the property market.
Brokers want lenders to do more to shorten these completion times as borrowers need fast funds to complete their development projects and keep the property market moving upward.