The UK Government’s Spring Statement and the OBR’s latest economic forecast confirm what many in the market have already suspected: the path to lower borrowing costs will be slower and more uncertain than previously hoped. 

But while the headlines focus on tighter fiscal policy and downgraded growth forecasts, there are emerging tailwinds for borrowers and investors who know where to look.

Amid the volatility, this is a moment to reassess strategies — not to sit still. Whether you’re securing finance for a new project or evaluating investment opportunities, the emphasis now is on deal structure, timing, and flexibility.

Macroeconomic Signals: Less Relief, More Resilience Required

The Office for Budget Responsibility (OBR) has halved its 2025 GDP growth forecast to just 1%, citing a fragile economy, macro and socio-economic uncertainty, and persistent inflationary pressure. Inflation is now expected to rebound to 3.8% by mid-2025 before easing again. 

Meanwhile, the Government is tightening the fiscal taps — through welfare reform, departmental spending cuts, and constrained headroom — reducing its capacity to stimulate growth directly.

The fiscal tightening could, however, give the Bank of England justification to act. With borrowing costs still high and private sector activity subdued, a more dovish monetary policy stance may emerge later this year. Markets are now pricing in a further 0.6 percentage points of rate cuts in 2025, though at a slower pace than anticipated.

For borrowers, this means the cost of finance is likely to remain elevated through much of the year. For investors, it reinforces the value of defensive, income-generating strategies that can perform even as the economic backdrop remains uncertain.

Yesterday’s announcements reinforce that holding pattern. With a tighter fiscal storm on the horizon, the question now is whether the Bank of England can steer the economy through with rate cuts. For borrowers and investors, macro uncertainty faces off against planning reform and upcoming MEES changes — but the risk is lessened by a shared desire from government and the market for more, higher-quality homes. That puts smart, stable financing at the heart of every opportunity — whether it’s homes to live in, rent or sell.

Housing Momentum: New Builds and Retrofit Activity on the Rise

Not all signs point to stagnation however. The Government’s planning reform agenda — most notably changes to the National Planning Policy Framework (NPPF) — is beginning to gain traction. The OBR forecasts that the NPPF reforms alone could unlock around 170,000 new-build homes by 2029. In total, recent and proposed changes are expected to enable the delivery of between 1.3 million (Government forecast) and 1.5 million homes (OBR forecast) over the next decade. Key measures include reintroducing mandatory local housing targets and easing restrictions on low-quality Green Belt land — all aimed at expanding housing supply at scale.

Alongside new builds, there’s growing regulatory and market pressure to upgrade the UK’s existing housing stock. The anticipated tightening of MEES (Minimum Energy Efficiency Standards) is driving a wave of refurbishment and retrofit projects, especially among professional landlords and developers with an eye on long-term asset value and compliance. Put simply, the market – driven by the people that need homes – is still buoyant, with developers and investors who upgrade older housing stock still generating strong value.

So the opportunity is clear — but only if the financing is there to make it viable. Whether it’s energy upgrades, converting underused property, or delivering homes on newly unlocked land, funding solutions must be flexible, timely and aligned with the investor’s goals.

What Should Borrowers and Investors Do Next?

In a market shaped by policy caution and monetary lag, deal structure probably matters more than speed right now. Securing the right terms, understanding hold periods, and preparing for exit scenarios that reflect today’s and tomorrow’s conditions are crucial — particularly in bridging and development finance.

• Borrowers should focus on flexibility, contingency planning, and cost certainty – particularly as refinancing timelines may stretch. We think borrowers that have scope to capital raise against unencumbered assets but pay cash for their next deal will do particularly well. Borrowers seeking term financing may find the flexibility of discounted trackers offer better reaction times.

• Investors should prioritise credit strategies that offer inflation-resilient yields and are back by real, productive assets. This means doubling down on the supporting refurbishment and retrofit strategies (“worst house on the street”) as exit LTVs should be materially lower, mitigating risk agains a slower sales market.

Holding Pattern, But Opportunity Favours the Prepared

While the economy may be in a holding pattern, the housing market is not. Policy momentum around supply, quality, and energy efficiency is building — and those prepared to act now will be better positioned when market conditions shift. Fortune favours the brave.

At LendInvest, we’re here to support that momentum — providing financing that helps borrowers and investors navigate complexity, move with confidence, and unlock opportunity in a market that’s anything but static.