Bridging market 'increasingly competitive' as loan purposes shift

The bridging finance sector demonstrated continued resilience and market stability in Q2, with key indicators pointing to an increasingly competitive marketplace, according to the latest Bridging Trends survey.

According to the latest data, the market saw a notable reduction in interest rates, continued growth in application volumes, and a shift in loan purposes.

The average monthly interest rate for bridging loans saw a decrease of 0.05 percentage points, moving from 0.86% in Q1 to 0.81% in Q2. 

Application volumes showed steady growth, increasing 11% year-on-year. Quarter-on-quarter growth remained steady with a 2% increase from Q1 2025, indicating sustained market activity and borrower confidence in bridging finance solutions.

Total gross lending remained relatively stable at £199.7 million in Q2 2025, representing only a marginal 1% decrease from both the previous quarter (£202m) and the same period last year (£201.8m). 

First charge loans made up 10% of all lending while second charge loans continued to dominate at 90% of the market. The average LTV remained consistent at 54% and the average loan term stayed consistent at approximately 12 months.

A significant trend in Q2 was the increased activity in refinance, with regulated refinance increasing by 76% between Q1 and Q2 and unregulated refinance increasing by 63%. Regulated refinance now accounts for the largest proportion of loans by purpose at 18%, up from 10% in Q1.

Auction purchases also saw a slight increase, rising from 12% of loans in Q1 2025 to 13% in Q2 2025. 

Gareth Lewis, deputy CEO at MT Finance, commented: "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. 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, added: “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.”