How have the property and bridging loan markets performed in 2022 so far?

We are now more than two months into the year, which is an ideal moment to pause and reflect on how the property market has fared. In this blog, we provide a snapshot of both the residential and commercial markets. We also consider how demand for residential bridging loans, commercial bridging loans and large bridging loans has changed.

Residential market

In February, the average price of a residential property coming onto market rose by 2.3%, or £7,785, compared to January. Homes were being listed at an average value of £348,804, which is 9.5% higher than this time last year. Put simply, the residential market has picked up where it left off in 2021. While transactions did dip slightly in the New Year, the overwhelming sense is that demand remains high.

Source: Rightmove

Indeed, we have experienced continuously high demand for residential bridging loans at the start of 2022. This has spanned a range of borrowers and products.

For instance, our buy-to-let mortgages, which fully launched in January, have proven popular with landlords looking to expand their portfolios. Indeed, we recently surveyed over 200 UK adults who own two or more investment properties. More than half (58%) of them said they plan to make another buy-to-let investments in 2022. From here, we’re expecting demand from investors looking for a buy-to-let loan to grow throughout the year.

We have also seen notable demand for short-term loans to refurbish property. This is a common seasonal trend. The New Year often elicits a desire among investors and homeowners to spruce up their properties, from light refurbishment finance through to extensions and renovations.

A home improvement loan is also a popular choice for buy-to-let owners as a way to entice new tenants or meet changing regulations.

Find out more about this topic, here: Will you need a home improvement loan in 2022?

Commercial market

The commercial market has experienced a similarly positive start to 2022. As Covid restrictions lift, more organisations are returning to the office. In turn, investment in commercial real estate is on the rise.

For example, Knight Frank has forecast that the central London office market will attract £60 billion of overseas investment over the next five years. That is the highest five-year total for more than two decades. Increased interest in commercial property investments is not limited to London. The amount invested in commercial property across the East Midlands doubled to almost £2.3 billion in 2021.

Source: CRE HeraldBusiness Live

Again, we have seen the investor demand translate into an uptick in enquiries for commercial bridging loans. In fact, we recently completed a deal with Knight Frank Finance for a client requiring a fast commercial loan to renovate a hotel and spa. Such cases, either for new purchases or renovations, have become increasingly commonplace over recent months.

The interest in commercial loans goes hand-in-hand with demand for large loans. After all, a commercial property investment will typically far exceed the value of a residential purchase. Therefore, the requirement for larger, multi-million-pound loans is growing.

See some more of our commercial and semi-commercial case studies here.

Trends to consider

The remarkable performance of the property market in 2021 has continued into 2022. The question is: how will the rest of the year unfold?

Rising inflation and the potential for further interest rates increases are both important trends to consider. These economic factors will determine how much an individual can afford to borrow, and consequently influence house prices and overall market demand.

Russia’s invasion of Ukraine is another event to watch. It has already had an impact across most financial markets, it could also influence economic policy. It may also result in a sudden drop-off in Russian investment into both the residential and commercial markets.

That said, forecasts remain positive across the board. Most experts suggest that house prices will rise by around 5% over the course of this year. Some, like Strutt & Parker, put the figure higher. The estate agent believes prices will increase by 7.5% across the UK, and 10% in London.

Source: Property Industry Eye

If you or your clients are seeking bridging finance solutions, either for residential or commercial investments, contact MFS today. Our friendly team of experts are on hand to discuss our wide range of products and how they can support borrowers, even in the most complex circumstances.

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