Masthaven started 2022 announcing on 11th January an interest rate increase on their bridging products.
However this was followed later in January by the announcement that they were withdrawing from the UK Banking Market, and that they would not be taking any new applications for bridging loans. The deadline for binding offers was the end of February and completions had to be done by the end of March.
We completed our last four Masthaven bridging loans during March, the very last case completed on 31st March.
This last ever bridging case through Masthaven was a regulated bridging loan for a little over £3 million and was to purchase a substantial property with land in Devon for a family relocating from London. A stunning property that also has outbuildings and future potential for holiday lets in beautiful Devon.
Although Masthaven have never been one of our preferred lenders, it is a huge shame to lose them. They were one of the main regulated lenders who did offer competitive facilities, and unlike their competitors, they were not afraid of the higher value regulated loans where some development or restoration was planned.
On a positive note, we have recently seen some exciting new bridging lenders enter the short-term market, plus the odd old name making significant changes and taking a fresh approach.
Lender MT Finance has launched a new £250 credit scheme to reward borrowers for attaining an EPC rating of A or B on their property.
This incentive has been designed to encourage customers to purchase more energy-efficient properties or carry out tasks such as upgrading windows, heat sources, and insulation. This is part of MT Finance’s initiative to bring greater focus on sustainability and to help the environment.
The offer is available across the lender’s entire product range and can be access by both new and existing customers.
Mint Property Finance has introduced a new 85% loan to value bridging facility with monthly rates starting at 0.4%.
Bridging loans traditionally have a maximum LTV of 75% so this product will allow customers to borrow an additional 10% “provided the exit strategy is sound.”
In addition to this, Mint has also scrapped its minimum term, with no valuation or personal guarantee required on bridging loans of up to 65% LTV.
In a revamp of their unregulated bridging facilities, major bridging lender Together have cut interest rates, increased loan to values, and double maximum loan sizes in the last week.
Rates for unregulated bridging loans for commercial property have been lowered to 0.85% at 60% LTV and 0.90% at 70% LTV. Maximum LTVs have also been increased from 65% to 70% for property purchases and from 50% to 65% for refinancing. The maximum loan amounts across the unregulated bridging range has also doubled to £1 million.
The lender has also reduced rates for residential investments from 0.65 to 0.55% for up to 50% LTV and from 0.75% to 0.65% for up to 60% LTV.
According to the latest data by the Association of Short-term Lenders, new bridging loan applications rose by 25.5% in the first quarter of 2021 when compared to the same period last year. This is a monetary figure of £7.49 billion.
Completions were also up by just over 10% compared to the first three months of 2020, however this does a follow a significant drop in completions (24.1%) in the 12 months leading up to 31 st March 2021. This reflects last year’s national lockdowns and the drop in housing market activity that they caused.
In more positive news, there has been a 4.5% decrease in the value of bridging loans in default when compared to December 2020.
As the housing market continues to recover after the events of 2020, bridging finance is proving to be a valuable product for those looking to complete property purchases before they receive mortgage offers and to take advantage of the temporary Stamp Duty relief.
The decrease in defaults is also good news as it means that more exit strategies (property sales, refinancing etc.) are coming to fruition, which is a very positive sign for the housing market.
Precise Mortgages has relaunched buy to let top slicing which will enable more flexibility to landlords.
Top slicing allows borrowers to use surplus portfolio or disposable income, instead of just rental income on the property alone, to pass the stress tests on new loan applications. Precise have made this feature available across their entire range of but to let products, and options include both 2 year and 5 year fixed rate deals. Loan sizes range from £75,000 to £3 million, with no minimum income requirements for loans under £1 million.
Even after applying, BTL customers can switch to top slicing which may help those whose properties have decreased in value.
These products will give greater choice and flexibility to landlords in the way they manage their properties and make future investments.
According to data by Bridging Trends, fixing/preventing a broken property chain was the most popular use for bridging finance for the second consecutive quarter. Funding a chain break accounted for 20% of all loans in Q1 of this year and 23% of all loans during Q4 of 2020.
The second most popular use for a bridging loan was to purchase a second/investment property. This purpose accounted for 19% of all loans in Q1 of 2021 and 21% of all loans in Q4 of 2020.
Regulated bridging loans (where the loan is secured against a property that either you, or a member of your family lives in) remained high with these taking up 48% of total lending in the bridging market.
These statistics highlight the ongoing situation in the property market where demand for property is high and the ability to obtain a mortgage is difficult. Where buyers have to pull out of property purchases due to struggling to qualify for a mortgage, bridging finance offers the perfect solution to those who would miss out on their purchase when their buyer pulls out.
Demand for bridging finance for business purposes also increased from 10% to 14% in the first quarter of this year, in line with businesses getting ready to reopen as lockdown restrictions continue to ease.
A client looking to purchase an office building in London was granted a bridging loan just nine hours after making the application. The client was looking to borrow £400,000 to expand their current portfolio of 10 investment properties.
The application went to lender Together and their specialist underwriting team were able to review it with their in-house legal team straight away. Together were able to instruct solicitors within just two hours of receiving the paperwork and a bridging loan was offered seven hours later.
Speed is a critical element with bridging finance and this completion just shows the huge benefits it provides to time-pressured situations.
After adjustments to their lending criteria and forging several new broker relationships, lender Hope Capital have seen a 196% growth in completions in the 6 months leading up to March 2021 when compared to the same period last year.
In the last few months Hope Capital have launched a series of new products that allow greater flexibility and higher LTVs and they’ve also started to offer their lending services to those with property in Scotland. This has enabled them to expand their client base and offer more to brokers.
Last updated: 22 November 2023 | © KIS Bridging Loans 2020