There was a spike in bridging lending during the first quarter of this year, primarily driven by chain breaks following the market turbulence caused by last September’s mini budget, research suggests.

The analysis by Apex Bridging shows that £278.8m was lent via bridging loans during the first quarter of 2023, a 68 per cent increase versus the previous quarter and the highest quarterly sum seen over the past two years.

Bridging lending had previously peaked in the third quarter of 2022 at £214.7m, before the market uncertainty caused by September’s mini budget caused many to reassess their position within the market.

This saw total bridging lending fall by 23 per cent during the final quarter of this year but, now that the dust has settled, this downward trend has reversed significantly, Apex Bridging said.

While investment purchases were the key factor behind bridging loans during the final quarter of 2022, it was chain breaks driving the sector in the first three months of the year, accounting for a quarter of all lending.

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Investment purchases remained the second biggest factor behind bridging lending during the first quarter of this year, with unregulated transactions also accounting for the largest proportion of market activity at 53.8 per cent.

“The breakdown of the bridging sector demonstrates the changing landscape we’ve seen in recent months, with the mortgage market turbulence caused by September’s mini budget resulting in a higher degree of borrowing as a result of chain breaks,” said Chris Hodgkinson, managing director of Apex Bridging.

“However, it’s fair to say that 2023 has started with a far greater degree of optimism than many expected and this is demonstrated by the fact that investment purchases continue to account for a significant level of market activity.

“As the year progresses, we expect stability to return to the residential market, which should reduce the level of bridging required to remedy chain breaks. At the same time also expect unregulated commercial investment activity to remain robust.”

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