Bridging lending forecast to hit £281.2m per quarter
The latest market analysis by bridging finance specialists, Apex Bridging, has revealed that since the property market has started to cool, there has been an average quarterly increase of 22% in gross lending across the bridging sector, with this total forecast to increase further by the start of 2024.
Apex Bridging analysed the latest figures on total gross lending across the bridging sector and how the reliance on bridging by UK homebuyers and owners has increased as market conditions have become increasingly difficult.
The analysis shows that pre-covid (Q1 to Q4, 2019, bridging lending actually fell at a rate of -0.8% per quarter during what were largely more subdued, but stable market conditions.
During the pandemic market boom that followed, hotter market conditions led to a far greater reliance on bridging simply due to the greater volume of transactions taking place, with total gross lending across the sector increasing at an average rate of 2% per quarter between Q1 2020 and Q1 2022.
However, with market conditions now starting to cool, the nation’s buyers and sellers have never been more reliant on the bridging sector in order to avoid a scuppered sale.
The latest quarterly figures show that total gross bridging lending sat at £278.8m in the first quarter of 2023. This marks a huge 67.6% increase on the previous quarter and, on average, bridging lending has increased by 21.8% per quarter since the market started to cool in Q3 of last year.
While muted market activity is forecast to see this total dip marginally in Q2 of 2023 (-2.6%), Apex Bridging forecasts total bridging lending to climb to £281.2m per quarter by the start of 2024.
Managing director of Apex Bridging, Chris Hodgkinson, commented: “While we may have seen an uplift in bridging market activity during the pandemic, this was largely driven by increased volume, not volatility.
However, in current cooling market conditions, the reliance on bridging is arguably greater due to the higher propensity for sales to drag on for some months, increasing the probability of a fall through and chain break.
Although we’re yet to see any signs of a significant market decline, we do expect these trickier conditions to persist and, as a result, the reliance on bridging finance to become all the more pronounced as the year plays out.”
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