We have also seen an uptick in buyers using bridging finance to purchase at auction. Since the pandemic, the majority of auction houses have moved online, making them more accessible, enabling the market to thrive.

It has not all been plain sailing, particularly considering the fallout from the disastrous mini-Budget. Mortgage rates soared, with many fixed deals rising to the highest level seen since 2008. This had an immediate impact on the housing market with vendors and developers reporting a drop in demand. This, coming on top of the war in Ukraine, cost of living crisis and inflation reaching a 40-year high, has meant for a traumatic few months.

On a positive note, rates on short-term lending products have not been impacted in the same way as fixed-term deals. Pricing remains competitive for this type of finance, giving borrowers breathing space if they wish to use bridging finance until the market settles. We’ve also seen an increase in variable and tracker rates, as well as products within the specialist market for bridging and development finance this year.

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We can take several lessons away from this chaotic year. Many brokers will be feeling overworked after long hours and trying to deal with last-minute rate pulls from lenders, so it’s important to continue to find a work-life balance. We may also need to work on adjusting client expectations in terms of interest rates, as we have enjoyed a low interest rate environment for so long. It’s important to understand the context of where we were and where we are now. At the time of writing, a base rate of 3.5% seems scary, but it has historically reached much higher levels and the property market still managed to thrive.

In terms of expectations and targets for next year, we will continue to keep an eye on costs, invest in highly talented people and technology, and continue to increase client service levels. We work closely with our existing key introducers and are always looking to set up relationships with new ones. 

After a few tough years for landlords, we may well see more of them re-enter the market in 2023, attracted by rising rents. While house price growth is slowing, rents continue to strengthen, offsetting some of landlords’ costs. Landlords are likely to opt for stock which has been sitting on the market for a while, as tightening affordability criteria makes it more difficult for home movers and first-time buyers to purchase.

We also expect regulated bridging finance volumes to continue to rise as homeowners look to utilise it for chainbreak purposes, where their buyers may not be able to obtain a mortgage due to affordability criteria changes. We also expect unregulated bridging to increase, as investors look to take advantage of below-market-value transactions as prices fall — this reflects some potential distress in the market, which we already started to see in 2022.

The economic landscape in 2023 will be challenging, but hopefully a price correction will stimulate the purchase market. Despite all the economic uncertainty and political landscape, the UK property market remains resilient, and we are optimistic about 2023 and the opportunities it will bring.