MortgagesNov 26 2015

Bridging loan growth slows significantly

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Bridging loan growth slows significantly

The rate of growth for bridging loans has slumped over the last year due to the relaxation of criteria in the mainstream market and bridging lenders becoming stricter, according to a report from the Association of Short Term Lenders’ (ASTL).

The latest quarterly figures from ASTL revealed the amount of loans written in September 2015 increased by 2.7 per cent, compared with an increase of 12.3 per cent in September 2014.

The number of applications for bridging loans in this quarter remained consistent, however, with a quarter-on-quarter increase of 17.1 per cent, compared with an increase of 11.6 per cent a year ago.

According to ASTL, demand for bridging loans is strong but lenders are not completing on the loans.

Benson Hersch, chief executive of the ASTL, suggested the slowdown in bridging loan growth could be caused by more new lenders entering the market and the increased availability of funds to existing lenders.

This means more brokers are shopping around, so each case is being offered to several lenders, he said.

He said: “Although there has been a slowdown in the rate of completions, the demand for bridging finance is up and competition in the bridging sector is strong.

“However I do not expect to see runaway growth, but a sensible and steady expansion of the sector.”

The total loan book for the quarter ending September 2015 stood at £2.41bn, an increase of just 0.8 per cent over the quarter ending June of this year.

This compares to September 2014 where the loan book total rose by 15.3 per cent over the June 2014 quarter, reaching £1.98bn.

katherine.denham@ft.com