The bridging finance market stayed steady in Q2 2025, with interest rates dropping and application numbers rising, according to Bridging Trends data.
Research found average monthly interest rates fell by 0.05 percentage points, moving from 0.86% in Q1 2025 to 0.81% in Q2 2025.
This was linked to a fall in base and swap rates and lower average loan-to-value (LTV).
Application volumes grew by 11% year-on-year (YoY), from 415 in Q2 2024 to 460 in Q2 2025.
Quarter-on-quarter, there was a 2% increase from Q1 2025.
Total gross lending stayed stable at £199.7m in Q2 2025, down just 1% from Q1 2025 (£202m) and Q2 2024 (£201.8m).
First charge loans made up 10% of the market, while second charge loans accounted for 90%.
Average LTV remained at 54% and the average loan term was about 12 months.
Refinance activity increased, with regulated refinance up 76% from 46 in Q1 2025 to 81 in Q2 2025.
Unregulated refinance rose 63% from 30 to 49.
Regulated refinance was the biggest loan purpose at 18% in Q2 2025, up from 10% in Q1 2025.
Auction purchases increased slightly, making up 13% of loans in Q2 2025 compared to 12% in Q1 2025.
Additionally, Knowledge Bank data showed development bridging and development finance was the most searched criteria among UK brokers.
Gareth Lewis, deputy CEO at MT Finance, said: “The latest Bridging Trends report highlights a resilient market adapting to current economic conditions.
“The reduction in interest rates combined with consistent application volumes suggests a healthy appetite for bridging finance.
“We are also seeing a clear shift in loan purposes, with refinance and auction purchases playing an increasingly significant role.”
Lewis added: “We expect continued sector stability and favourable market conditions throughout 2025 as lenders continue to improve operational efficiency on all fronts.”
Chris Whitney, head of specialist lending at Enness Global, said: “The Bridging Trends Q2 data reflects a market that continues to mature, with borrowers increasingly using bridging finance as a proactive solution rather than a reactive one, utilising it as a tool to meet complex and time-sensitive requirements such as auction purchases.
“With interest rates edging down and application volumes growing, the sector is clearly demonstrating both adaptability and continued relevance in a changing financial landscape.”
Dale Jannels, managing director at Impact Specialist Finance, said: “We’re seeing several new brokers placing clients in the bridging market.
“Every day is a learning day, but now more brokers are exploring and educating themselves on the many benefits that bridging can bring to their client banks.
“I’m not surprised volumes have remained resilient, and I see this only increasing in the latter part of the year as the market demands more solutions away from the high street.”
