Bridging applications continue to climb

25 May 2021

New bridging applications achieved £7.49bn in Q1 2021, an increase of more than 25.5% on the same period in 2020.

This is according to the latest figures compiled by auditors from data provided by members of the Association of Short-Term Lenders. The data shows that the value of new bridging applications in Q1 2021 was 12.0% higher than in Q4 2020 and 17.9% higher on the previous year in the 12-month period ending 31st March 2021, reflecting feedback from the market demonstrating increased demand from customers.

Completions in Q1 2021 fell by 1.9% on Q4 2020 but were up by 10.7% on the same period last year. In the 12 months up to 31st March 2021, completions were down by 24.1% on the previous year, reflecting the period of low activity during last year’s lockdowns.

The value of bridging loan books dropped to £4.40bn at the end of Q1 2021, a slight decrease of 1.7% on the previous quarter and down by 3.5% on the same period last year.

There was positive news regarding defaults, with the value of loans in default showing a decrease of 4.5% compared to December 2020. The value of loans in default is now just 2.2% higher than March 2020.

Vic Jannels, CEO of the ASTL says: “The Q1 lending figures reflect the story we are hearing from the market, that everyone is busy with new business applications. In fact, the value of applications in the first quarter of 2021 was more than a quarter higher than the same period in 2021, which was mostly unaffected by the Covid pandemic.

“The value of completions remains relatively steady, which means we are seeing an increasing number of bridging loan applications that are not progressing through to completions. This is likely to be a combination of more rigorous underwriting by lenders, brokers hedging their bets by submitting multiple applications to multiple lenders and some cases where bridging is no longer required by the time of the completion date. We should keep a watchful eye on this trend as a decreasing conversion rate for loans benefits nobody in the process.

“On a more positive note, the value of defaults decreased on last quarter and is only a little higher than it was at the start of the pandemic. This reflects the hard work of all of our members in working with their existing customers over the last year and, with positive signs for the economy ahead, we have reason to believe that this trend can continue.”