Year-On-Year Bridging Applications Increase By Over 25.5%

The Association of Short-Term Lenders (ASTL) have revealed data that shows bridging applications increased by more than a quarter to hit £7.49bn in the first quarter of 2021.

“Increased Demand from Customers”

New loan applications increased by more than 25.5% in the first three months of 2021, compared to the same period in 2020, which is described by the ASTL as displaying “increased demand from customers”.

Utilising data compiled by auditors from data provided by their members, the findings from the ASTL show that the value of new bridging applications in the first quarter of the year was 12.0% higher than the final quarter of last year and 17.9% higher on the previous year in the 12-month period ending 31 March 2021.

Impact Of Covid Pandemic Results In Bridging Fluctuations 

The data also revealed that the value of new bridging applications in Q1 2021 was 12.0% higher than in Q4 2020.

Completions in Q1 2021 fell by 1.9% on Q4 2020 but were up by 10.7% on the same period last year. In the 12 months up to 31 March 2021, the ASTL also revealed that completions were down by 24.1% on the previous year, reflecting the period of low activity during last year’s lockdowns.

Furthermore, the value of bridging loan books dropped to £4.40bn at the end of Q1 2021, a slight decrease of 1.7% on the previous quarter, and a figure down by 3.5% on the same period last year.

There was positive news regarding defaults, with the value of loans in default showing a decrease of 4.5% compared to December 2020. The value of loans in default is now just 2.2% higher than in March 2020.

Increased Applications From Businesses. More Rigorous Underwriting From Lenders

What the stats don't fully tell us though is the possible reduced conversion rate as a result of increased new business applications, strenuous lender underwriting, and even the possibility that the bridge is no longer required at the date of completion.

“Everyone is busy with new business applications”

Discussing the findings, Vic Jannels, CEO of the ASTL says, “The Q1 lending figures reflect the story we are hearing from the market, that everyone is busy with new business applications. In fact, the value of applications in the first quarter of 2021 was more than a quarter higher than the same period in 2021, which was mostly unaffected by the Covid pandemic.

“The value of completions remains relatively steady, which means we are seeing an increasing number of bridging loan applications that are not progressing through to completions. This is likely to be a combination of more rigorous underwriting by lenders, brokers hedging their bets by submitting multiple applications to multiple lenders and some cases where bridging is no longer required by the time of the completion date. We should keep a watchful eye on this trend as a decreasing conversion rate for loans benefits nobody in the process.

“On a more positive note, the value of defaults decreased on last quarter and is only a little higher than it was at the start of the pandemic. This reflects the hard work of all of our members in working with their existing customers over the last year and, with positive signs for the economy ahead, we have reason to believe that this trend can continue.”

For further information, visit the ASTL today.