The bridging finance sector demonstrated continued resilience and market stability in Q2 2025, with key indicators pointing to a maturing and increasingly competitive marketplace, according to latest industry data.
Key Points for Q2 2025:
- Interest rates decrease to 0.81 per cent, down from 0.86 per cent in Q1 2025
- Application volumes rise 11 per cent year-on-year to 460 applications
- Market demonstrates stability with consistent lending levels
According to the latest data, the bridging loan market continued to demonstrate resilience in Q2 2025, marked by 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 per cent in Q1 2025 to 0.81 per cent in Q2 2025. This reduction in borrowing costs can be directly linked to the decrease in base and swap rates and reduced weighted average LTV. The downward trajectory continued the trend from the previous year, demonstrating the sector's increasing competitiveness and improved cost of capital.
Application volumes showed steady growth, increasing 11 per cent year-on-year from 415 applications in Q2 2024 to 460 in Q2 2025. Quarter-on-quarter growth remained steady with a 2 per cent 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 per cent decrease from both the previous quarter (£202m) and the same period last year (£201.8m). This stability underscores the sector's resilience and the consistent demand for bridging finance across various market conditions.
First charge loans made up 10 per cent of the loans while second charge loans continued to dominate at 90 per cent of the market. The average loan-to-value (LTV) remained consistent at 54 per cent, and the average loan term stayed consistent at approximately 12 months, reflecting prudent lending practices.
A significant trend in Q2 2025 was the increased activity in refinance, with regulated refinance increasing by 76 per cent from 46 in Q1 2025 to 81 in Q2 2025, and unregulated refinance increasing by 63 per cent from 30 in Q1 2025 to 49 in Q2 2025. Regulated refinance now accounts for the largest proportion of loans by purpose at 18 per cent in Q2 2025, up from 10 per cent in Q1 2025.
Auction purchases also saw a slight increase, rising from 12 per cent of loans in Q1 2025 to 13 per cent in Q2 2025. This indicates continued demand for bridging finance in property auctions.
Data provided by Knowledge Bank revealed that development bridging and development finance was the top criteria search by UK bridging finance brokers in Q2.
Gareth Lewis, Deputy CEO at MT Finance comments:
"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 comments:
"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 comments:
“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.”
