The most recent Bridging Trends report has revealed an interesting and potentially worrying new statistic—the average completion time for bridge loans has increased by 4 days in the last quarter. In Q2 of 2017, the average completion time was 39 days. This has crept up to 43 days in Q3.
Bridge loans are typically desired by clients for their speed; though you’d likely need a good broker, it’s possible to get indicative terms out for a normal mortgage in the five weeks it is now taking bridge loans to process.
10% of borrowers wanted bridge loans for auction purchases, whilst 12% wanted to re-bridge, both of which are time sensitive demands.
So what can be done to decrease the amount of time needed to process a bridge loan?
I think some lenders in the sector need to start thinking about streamlining completion processes. As we can clearly seem from the Bridging Trends report, mortgage delays were voted as the number one reason people take out a bridge loan.
Therefore, a sizeable part of the market is bridging the gap between desired acquisition time and a standard term mortgage being put in place. If that bridge is taking longer to get, the benefits of having it will diminish until it gets to the point where it isn’t worthwhile.
After all, the average term for a bridge loan in Q3 was 12 months—these are meant to be quick solutions for short term lending, not a long-winded process. The bridging finance world has worked hard to shed the slightly shady image. If the average time to complete gets any longer, borrowers may feel increasingly disinclined towards the industry.
Fortunately, with the right contacts and a dedicated broker, it is still possible to push through the bridge finance process quickly—earlier this year, we arranged a bridging loan in under a week.