What to Expect from the Property Market and Bridging Loan Industry in 2022?

Posted by Market Financial Solutions on 13th December 2021 -

The end of 2021 is fast approaching. At this time of year, it is natural to reflect on the highs and lows of the past 12 months, and also consider what lies ahead. We have therefore reviewed the performance of the property market this year. We’ve also taken a look at the upcoming trends within the bridging industry and property investment sector in 2022.

Certainly, we’ve enjoyed one of the most successful periods in our 15-year history. The volume of enquiries and completed loans has continued to rise. But what should we expect from 2022? Here are three predictions…

1) Property prices to rise further

After impressive growth throughout 2021, there are now questions as to whether this trend can continue in 2022. According to the experts, the answer is ‘yes’.

Savills has forecast house price growth of 3.5% in 2022. Zoopla has suggested a rate of 3%, while Rightmove says 5%.

Source: Savills, Zoopla and Rightmove

The outlook is positive, with a vast majority of commentators projected ongoing growth in the months ahead.

2) Interest rates and finding the right loan

Interest rates seem certain to increase in 2022. Inflation is expected to rise from 4% to 5% by next spring, while data suggests that employment rates remain healthy even since the furlough scheme ended. This should force the Bank of England’s hand – many are forecasting multiple interest rates hikes in the next year.

Source: Bank of England

If interest rates rise, the cost of borrowing will increase. For property buyers, this raises questions around the suitability of different financial products, and how to find the best possible solution for their acquisition. Positively, the bridging sector is a constant source of innovation, and we’re proud to be at the forefront of it. For instance, we recently began a pilot for a new range of buy-to-let (BTL) mortgages. The pilot has been a clear success – within two months we had received over £100 million of enquiries. We also completed our first loan by the end of November.

Whether it is bridging finance for auction purchases or loans for BTL investments, MFS will be further enhancing its offering in 2022. This will give property investors a wealth of options, which will be important as the interest rate landscape evolves.

3) Covid-19 to throw out more curve balls

For all the talk of post-pandemic recoveries, it’s clear that we’re not yet in the final stages of the crisis. The sudden emergence of the Omicron variant, which data suggests is more transmissible than existing strains of the virus, has shown that there is no room for complacency. In 2022, further developments like this seem likely. Yet for the property market, this need not be damaging.

Source: BC

The pandemic so far has highlighted that demand for bricks and mortar investment does not necessarily suffer from economic turbulent or social challenges. In fact, it will often thrive because of them. In times of uncertainty, investors look to real estate as a reliable asset able to deliver long-term capital growth alongside regular rental returns.

No matter how events unfold in 2022, we will be here to support brokers and property investors. Our flexible, industry-leading bridging products can assist buyers in a wide range of circumstances, no matter how complicated.

The property market in 2021

Whilst there have been challenges, the performance of the UK property market in 2021 has been remarkable. It has been another turbulent year due to the pandemic.

• House prices have continued to rise
• Transactional activity has reached healthy levels

The stamp duty holiday did much to spur on this activity, but it was not the only factor. In fact, UK house prices grew at the fastest pace in 15 years in the three months to December 2021, with the average home valued at £20,000 more than this time last year.

Source: Halifax

This year is also on course to be the strongest for homebuying activity since 2006. Whilst demand among buyers was boosted by the tax savings, the cheap cost of borrowing was another factor. Interest rates remain at a historic-low of 0.1% since its announcement earlier this year.

Of course, the imbalance between supply and rising demand has been critical in the pace of house price growth. Indeed, the housing shortage has continued to be a major issue this year. This is sure to remain the case in 2022. You can read more about this in MFS’ new Housing Crisis report.

Source: UK Finance

Demand for bridging loans

With the property market a hive of activity, the bridging loan market has been equally busy. A recent survey of brokers found that 51% had seen a rise in demand for bridging finance during the pandemic, compared to a mere 3% who saw a decrease.

Source: Property Investor Post

Speed and flexibility have been important factors. Property buyers, particularly investors, have often required specialist solutions to help them overcome issues like:

• Broken chains
• Another lender pulling out
• Complex set of circumstances behind their purchase