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, analysis by Apex Bridging has revealed.
Pre-Covid – from Q1 to Q4, 2019 – bridging lending fell at a rate of -0.8% per quarter during what were largely more subdued, but stable market conditions.
During the pandemic there was a greater reliance on bridging, with total gross lending across the sector increasing at an average rate of 2% per quarter between Q1 2020 and Q1 2022.
The latest quarterly figures showed that total gross bridging lending sat at £278.8m in the first quarter of 2023.
This marked a significant 67.6% increase on the previous quarter.
On average, bridging lending increased by 21.8% per quarter since the market started to cool in Q3 of last year.
This dipped marginally in Q2 of 2023 (-2.6%), but Apex Bridging forecast total bridging lending to climb to £281.2m per quarter by the start of 2024.
Chris Hodgkinson, managing director of Apex Bridging, said: “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.”
