The latest Bridging Trends data shows that borrowers focused on purchases and refinances in Q1 as interest rates fell
Key Points for Q1 2026:
- Purchasing an investment property remains the most popular use of bridging finance
- Demand for heavy refurb finance hits all-time low
- Proportion of unregulated bridging loans at highest level since Q4 2021
- Average monthly interest falls as LTV also drops
Purchasing an investment asset remained the most popular use of bridging finance in Q1 2026, accounting for 22% of all transactions and static compared with Q4 2025. With the war in Iran starting at the end of February, it is likely that the impact of the conflict won’t be fully clear until the second quarter.
In fact, landlords and investors seemed to be gaining confidence prior to the start of the conflict and taking advantage of a sense of stability, with unregulated bridging loans extending their market share from 56% in Q4 2025 to 59% in Q1. This is the highest it’s been since Q4 2021 when it came in at 64%.
The focus on purchases was also evident in the proportion of first charge bridging loans which rose from 89% in Q4 to 91% in Q1, the joint highest it has been since Bridging Trends records began in 2015. Unsurprisingly, this move away from second charges saw demand for finance to fund heavy refurbs and business injections (which are often associated with equity release) plummet, from 11% in Q4 to 6% in Q1 and 8% in Q4 to 4% in Q1 respectively.
There was also a marked jump in the percentage of bridging loans used to fund unregulated refinance. This more than doubled, rising from 5% in Q4 to 11% in Q1. Borrowers waiting for more favourable rates before moving onto longer-term products could be a reason for this. However, Knowledge Bank reported an increase in searches made by UK bridging finance brokers for both ‘grade 2 listed building’ (from 31 in Q4 to 89 in Q1) and ‘development exit products’ (from 52 in Q4 to 99 in Q1) which suggests there is still an appetite among some borrowers for renovations, particularly when it comes to maximising ROI before selling or refinancing.
In total, £199.2 million in bridging loans was transacted by Bridging Trends contributors in Q1, a slight change from Q4’s £199.9m. The average loan-to-value (LTV) fell from 56% in Q4 to 52% in Q1, which was probably a contributing factor to the average monthly interest rate also dropping, going from 0.83% in Q4 to 0.82% in Q1.
The average term for a bridging loan remained 12 months and the average completion time rose slightly, from 52 days in Q4 to 53 days in Q1.
Sonny Gosai, bridging and commercial director at Brilliant Solutions, comments:
“Q1 2026 highlights a bridging finance market that remains resilient and increasingly selective. While contributor gross lending held firm at nearly £200m and first charge lending continued to dominate, the data shows borrowers prioritising speed, security and investment-led opportunities. Investment purchases remained the leading use of bridging loans, while demand shifted away from heavy refurbishment and business-purpose borrowing, reflecting a more cautious but opportunity-driven market landscape.”
Chris Oatway, CEO at LDN Finance, comments:
“Investor confidence remains strong, but the standout trend is the reduction in average LTVs, which suggests lenders are becoming more cautious amid ongoing global and economic uncertainty. The market is clearly favouring lower-risk transactions, with borrowers and lenders alike prioritising straightforward acquisition and refinance deals over heavier refurbishment projects where construction costs, programme delays and sales tail risk create greater exposure.”
Raphael Benggio, bridging director at MT Finance, comments:
“It is encouraging to see that bridging lending remained stable going into 2026. Investors and landlords in particular seemed to be maximising bridging’s potential in Q1 and the dip in LTV shows that borrowers were careful about not overburdening themselves. We will have to wait and see to get a real measure of how the conflict in Iran has affected the market but the bridging sector will continue to offer solutions to landlords, business owners and homeowners alike.”
Shane Chawatama, sales director at Knowledge Bank, comments:
“These search trends within bridging highlight a clear shift in investor behaviour. While interest in first-time landlord scenarios has fallen significantly, we’re seeing notable growth in areas such as development exits and Grade-II listed properties.
“The rise in development exit searches, in particular, suggests that more investors are actively seeking to maximise value through refurbishment or redevelopment before refinancing or sale. This is mirrored in the increase in searches around listed buildings, where there is clear potential to add value, albeit alongside tighter planning and renovation restrictions.
“Together, these trends point to a market that is becoming more strategic, but also one that must navigate the ongoing challenges of upgrading existing housing stock, particularly in the context of evolving EPC requirements and regulatory pressures.”
To view the Bridging Trends Q1 2026 infographic, please visit www.bridgingtrends.com
