Borrowers increasingly used bridging loans to prevent property chain breaks and release equity during the second quarter as the conflict in Iran added to economic uncertainty.
Gross lending reported by contributors to Bridging Trends fell to £173.1 million in the second quarter of 2026, down 15% from £199.2 million in the previous three months.
The report suggested that some borrowers may have postponed transactions around the end of the first quarter and beginning of the second in response to the Iran conflict. As uncertainty persisted and high-street lenders withdrew products or raised rates, borrowers turned to short-term finance to meet transaction deadlines.
Preventing a chain break and purchasing an investment property were the joint most common uses of bridging finance, each accounting for 18% of transactions. In the first quarter, the respective figures were 14% and 22%.
The increase in chain-break finance coincided with stronger demand for regulated bridging. Its share of lending rose from 41% to 48%, the largest quarterly increase since the first quarter of 2022.
MORE BORROWERS RELEASE EQUITY
Auction finance accounted for 14% of transactions, up from 11%, while the proportion of heavy refurbishment loans increased from 6% to 10%. Loans used to inject capital into a business represented 9% of activity, compared with 4% in the preceding quarter.
The share of second charge bridging loans rose from 9% to 22%, its highest level since reaching 22.2% in the first quarter of 2021. The figures indicate that homeowners, investors and business owners increasingly sought to release equity without replacing their existing mortgages.
Despite the increase in second charge borrowing, the average monthly interest rate edged down from 0.82% to 0.81%. The average loan-to-value ratio increased from 52% to 55%, remaining below 60%.
Average completion times shortened by seven days, from 53 days in the first quarter to 46 days in the second. The average loan term remained unchanged at 12 months.
Knowledge Bank recorded some of the largest changes in broker searches for “cross collateral charges”, “lease extension before completion” and “holiday lets”.
INDUSTRY REACTION
Steve Sanderson, commercial and bridging specialist at Clever Lending, says: “The Q2 data should act as a reminder of just how versatile bridging loans can be.
“The fact that more borrowers are utilising second charges to access equity, which some products don’t allow, is testament to the support brokers and lenders have been giving their clients to ensure a positive outcome is achieved.
“I expect this approach to thinking outside of the box to continue well into Q3 and Q4.”
Raphael Benggio, bridging director at MT Finance, says: “Considering the ongoing uncertainty, it was inevitable that the bridging industry was going to be impacted by global events.
“Instead of postponing transactions indefinitely, borrowers have just adapted and it is extremely encouraging to see that they continue to be supported by the specialist finance sector.”
Shane Chawatama, sales director at Knowledge Bank, adds: “Bridging lending continued to shift towards larger and more complex cases in Q2.
“The search term ‘cross collateral charges’ was the standout riser for the second consecutive quarter, while ‘maximum property value’ also saw strong growth, suggesting increased demand for higher-value borrowing.
“‘Development finance for commercial property’ was another notable mover, highlighting continued interest in commercial development opportunities and more sophisticated funding requirements. Commercial properties are continuing to be a good option for investors in the market.”
Bridging Trends combines loan completions from Adapt, Brightstar Financial, Brilliant Solutions, Capital B, Clever Lending, Clifton Private Finance, Complete FS, Enness, Impact Specialist Finance, LDNfinance, Optimum Elite and Sirius Finance. Knowledge Bank supplies the data on broker criteria searches.
