JoshLandlords and investors looking to take advantage of the temporary stamp duty relief have fuelled impressive quarterly performance for the bridging loans sector. According to newly published data from MT Finance, total bridging loans activity for Q2 reached an impressive £146.5 million, marking an increase of 1.4% from the previous three months.
MT Finance’s latest Bridging Trends report cites the expiration of the stamp duty holiday as a catalyst for the sector, encouraging landlords and investors to take action to benefit from the incentives available.
“Property investors and landlords took advantage of tenant demand and the stamp duty holiday deadline at the end of the second quarter to expand their portfolios,” reads an extract from the Bridging Trends Q2 2021 report.
Throughout the second three months of the year, investment property purchases were the single most common application for bridging loans, accounting for almost one in four transactions. This represents a marked increase from the 19% recorded during the first quarter.
Significant Growth in First-Charge Lending
MT Finance also noted a significant increase in the number of first-charge bridging loan applications over the past three months, which according to the firm’s reports were “again motivated by the desire to take advantage of the full stamp duty holiday”.
First charge applications accounted for around 90% of all applications during the period – significantly higher than the 77.8% recorded for Q1.
Elsewhere, Paragon Bank reported last week that the number of landlords experiencing growing demand from tenants is at its highest since 2016.
The report from MT Finance also indicated a decrease in bridging loan completion times, despite the high volumes of applications being processed by lenders.
“Bridging loan application processing times reduced significantly as brokers, lenders, surveyors, and solicitor firms all battled to complete property deals before the stamp duty holiday started to taper off,” it stated.
Strong Performance and Stability
Commenting on the findings, MT Finance commercial director Gareth Lewis spoke with optimism about the immediate outlook for the sector as a whole.
“As purchases would have been at the top of people’s minds due to the stamp duty saving, it’s no surprise to see that first-charge lending has significantly increased its share of transactional volumes,” he said.
“It will be interesting to see if this percentage decreases in the coming months as consumers look to raise finance out of existing properties to fund further property acquisitions or businesses.”
Likewise, head of specialist lending at Enness, Chris Whitney said there was no reason to think that the momentum of the market is likely to experience a slowdown anytime soon.
“It looks like we have reached quite a stable platform over the last two quarters,” he added.
“Any previous pandemic worries seem to have been put to one side with the stamp duty holiday deadline creating a frenzy of activity,”
“The higher level of investment purchases shows confidence in the UK property market is strong,”
“I am slightly surprised that lending volumes weren’t higher. The market certainly felt very busy as we struggled to get values out in a timely manner due to volumes and many a solicitor was having to burn the midnight oil to keep up with demand,”
“Nice to see the time it takes to draw a loan heading in the right direction albeit was that again stamp duty deadline linked? It will be interesting to see where that is at in the next quarter.”
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