"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"
- Raphael Benggio - MT Finance
The bridging finance market remained broadly stable in Q1 2026, with contributors to the Bridging Trends dataset transacting £199.2m in loans, marginally down from £199.9m in Q4 2025. Purchasing an investment property was again the most popular use of bridging finance, accounting for 22% of all transactions, unchanged from the previous quarter.
MT Finance's Q1 data was largely gathered before the full economic impact of the conflict in Iran, which began at the end of February, could take effect. Prior to that, landlords and investors appeared to be growing in confidence, taking advantage of a period of relative stability. Unregulated bridging loans extended their share of the market from 56% in Q4 to 59% in Q1, the highest level recorded since Q4 2021, when they reached 64%.
The focus on purchases was also visible in the rise of first charge lending, which climbed from 89% in Q4 to 91% in Q1, joint highest since Bridging Trends records began in 2015. The shift away from second charges contributed to sharp falls in demand for heavy refurbishment finance and business injection loans, which dropped from 11% to 6% and from 8% to 4%, respectively. Demand for heavy refurbishment finance has now hit an all-time low.
Unregulated refinance bucked that trend, more than doubling its share from 5% in Q4 to 11% in Q1. Borrowers holding out for more favourable rates before moving onto longer-term products may partly explain the jump.
Knowledge Bank also reported a significant increase in broker searches for both grade 2 listed buildings, rising from 31 in Q4 to 89 in Q1, and development exit products, up from 52 to 99 over the same period, suggesting continued appetite for value-add strategies ahead of a sale or refinance.
Average LTV fell from 56% to 52%, a likely factor in the average monthly interest rate easing from 0.83% to 0.82%. The average loan term remained at 12 months, while average completion time edged up slightly from 52 to 53 days.
"Q1 2026 highlights a bridging finance market that remains resilient and increasingly selective," said Sonny Gosai, bridging and commercial director at Brilliant Solutions.
"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."
The drop in LTVs was a particular focus for Chris Oatway, chief executive officer at LDN Finance. "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," he said.
"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."
"It is encouraging to see that bridging lending remained stable going into 2026," said Raphael Benggio, bridging director at MT Finance. "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."
The search data from Knowledge Bank points to a more strategic market taking shape. "These search trends within bridging highlight a clear shift in investor behaviour," said Shane Chawatama, sales director at Knowledge Bank.
"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."
