The UK association of Bridging Loan Lenders

Chain Breaks Continue To Be The Most Popular Bridging Finance Use

The results are in! Thanks to the latest report from Bridging Trends it's been revealed that for the second consecutive quarter, the most popular use of a bridging loan was to fund a property Chain Break, contributing to 20% of all loans in Q1 2021. 

This demonstrates how borrowers are utilising bridging loans to manage their delayed property purchases. An expected outcome considering the worldwide pandemic over the past 12 months, combined with looming Stamp Duty relief deadlines leading to what's been described as a “buying frenzy”

Whilst Chain Break was the most common use of bridging finance, the Bridging Trends' report shows that this was actually down from 23% during Q4 2020.

The 2nd most common bridging loan purpose was for Investment Purchasing, at 20% of bridging finance use in Q1. As with chain break use, this was down from the previous quarter (21%).

With ‘Investment Purchase’ being a close second to ‘Chain Break’ for bridging uses, the indication is that investors are utilising bridging finance to quickly capitalise on property opportunities and increase their property portfolios. 

Other purposes that saw their percentage of use drop were:

  • Rebridge Finance = 9%, down from 11%
  • Unregulated Finance = 5%, down from 9%
  • Other Finance = 4%, down from 6%

‘Business Purposes’ Bridging Increase

Utilising bridging finance for ‘Business Purposes’ increased from 10% to 14% as business cope with lockdown restrictions whilst also preparing themselves for lockdown easing.

The bridging loan purposes that saw quarter-on-quarter increases were:

  • Business Purposes = 14%, up from 10%
  • Regulated Finance = 13%, up from 8%
  • Heavy Refurbishment = 10%, up from 8%
  • Auction Purchase = 6%, up from 4%

To discover the full Q1 report, visit Bridging Trends.

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