Following a strong start to the year, bridging lending slowed to a steady pace in the second quarter of 2023, according to the latest research from Apex Bridging.
In the second quarter there was £165.7m of bridging lending, representing a 40.6% drop from £278.8m in the first quarter.
However, the Q1 total was the highest measured since the pandemic, and Apex argued that this should not be seen as a normal level.
Levels of bridging lending in Q2 2023 roughly reverted to what was recorded in Q4 2022, when lending stood at £166.3m.
On an annual basis, lending dropped by 7.1%, falling from £178.4m in Q2 2022.
Chain breaks continued to be the most popular use of the product in Q2 2023, being the reason borrowers used bridging 24% of the time.
The second most popular use was for investment purchases, at 22%, followed by heavy refurbishments at 13%.
The proportion of borrowers using the product for investment purchases increased from 15% in Q1, which suggested that more people had confidence in the market.
Similarly, the proportion using bridging for heavy refurbishments rose from 10% in Q1 to 13% in Q2.
Typical bridging rates stood at 0.84% in the second quarter of 2023, up from 0.79% in the first quarter of 2023, and 0.69% in the second quarter of 2022.
Chris Hodgkinson, managing director of Apex Bridging, said: “The bridging sector was a calmer place over the spring and summer months, taking a breath after having an extraordinarily busy Q1.
“We could be set for a steadier end of the year too, as homeowners are adapting to a new normal of higher mortgage rates.
“Finance is also becoming more expensive in the short-term lending sector, making it harder for investments to pay off.
“One positive is a greater proportion of people using the product for investment purchases and heavy refurbishments, suggesting investors are still seeing opportunities to make strong returns in the current market despite the tougher conditions.”
