The UK mortgage and property market ended 2024 with a modest but meaningful uplift, as the latest Q4 2024 Financial Conduct Authority (FCA) data showed small but steady increases in lending volumes and future commitments.

While some this can be attributed to seasonal factors and buyers moving ahead of the April 1st Stamp Duty changes, the broader picture suggests that cautious optimism is returning.

Yet, with Swap rates still volatile, interest rates falling more slowly than expected and affordability stretched, the key question isn’t just what happened in Q4 – it’s what these trends mean for investors, developers and homebuyers looking ahead.

Is now the right time to borrow, invest or refinance? Or should buyers and lenders wait for greater rate clarity?

Mortgage Lending: A Gradual Recovery in Progress

The latest data reveals modest lending growth, particularly in gross mortgages advances and new mortgage commitments, suggesting renewed borrower engagement.

Key Q4 2024 Figures vs. Q3 2024

• 📈 Outstanding Mortgage loans: £1,678.2bn (+0.5% QoQ, +1.3% YoY)
• 📈 Gross mortgage advances: £68.8bn (+4.9% QoQ, +29.9% YoY)
• 📈 New mortgage commitments: £69.3bn (+4.9% QoQ, +50.7% YoY)

While this marks a clear improvement from Q3, lending remains below historical peaks, reflecting ongoing affordability challenges and lender caution.

At the same time, buyers are having to stretch further:

• 🏠 Higher LTV (90%+ loan-to-value) lending: Up to 6.6%—highest since 2008
• 🏠 High LTI (loan-to-income) lending: 45.3% of loans now at higher LTI ratios

This trend underscores the growing affordability challenge, with buyers having to take on larger loans relative to income. For the market to sustain this momentum, affordability improvements will need to come from rate stability and lower financing costs.

The Big Question: What Happens Next?

The modest but positive shift in lending comes ahead of a critical month for those looking to invest in, borrow from or fund the UK financial property markets. That’s because over next few weeks there will be a raft of crucial data and decision making that will define borrowing conditions:

• 📊 ONS GDP (March 14th) & CPI figures (19th March) – shaping inflation expectations and growth outlook.
• 💷 BoE interest rate decision (20th March) – the biggest driver of short-term lending conditions.
• 📉 Spring Budget & OBR forecasts (March 26) – key fiscal policy announcements affecting housing, taxation, and investment incentives.

While interest rates are falling slower than expected, their eventual trajectory will determine whether this lending growth continues – or stalls. Meanwhile, swap rate volatility remains a key barrier, impacted as much by macros-economic global factors as UK decision making, affecting how quickly lenders can adjust pricing.

Crucially, the Spring Budget will provide fresh insight into how the government plans to support property market growth. Housing policy, planning reforms, potential tax changes for landlords, and development incentives could all shift financing conditions for investors and developers in the months ahead.

For borrowers and investors, the coming weeks will offer critical signals on whether financing conditions will ease in the first half of 2025 – or remain restrictive until later in the year.

Investor and Borrower Strategies: How to Position for 2025

For Property Investors:

• Buy-to-Let and Bridging finance remain active, particularly in rental conversions and property upgrades.
• Institutional investors are still deploying capital into mortgage-backed securities (MBS), though macro-economic and geopolitical uncertainty is delaying some investment decisions.
• Property Investors should closely watch swap rate movements – lending criteria may shift if rate expectations change.

For Property Investors:

• Mortgage availability is improving, with lenders becoming more competitive, but affordability remains stretched as higher rates persist.
• The next few months will determine whether rate cuts come fast enough to ease borrowing pressures or if affordability constraints continue to limit activity.
• Waiting could mean facing increased competition later in the year, particularly if lending continues to improve and rate cuts materialise.

For Developers and Landlords:

• Financing options and credit availability has improved significantly since mid-2024 – with more providers and value propositions on the market – helping smaller scale developments move ahead.
• With the stamp duty-driven mortgage rush likely to fade post-April, developers should time new projects carefully to avoid near-term dips in demand.
• Government-backed planning reforms could help accelerate housing supply, particularly through:
  • Faster planning approvals – Proposed streamlining of local authority decision-making could reduce delays for smaller developments and conversions.
  • Stronger land acquisition policies – Councils may gain more power to unlock land, which could present new development opportunities in key areas.
  • Infrastructure investment – Proposed simplifications to infrastructure planning could support larger-scale projects, potentially making them more viable.
• If these policies materialise, smaller-scale and regional developments could see increased momentum, particularly where alternative finance solutions like bridging and Buy-to-Let are already playing a key role.

UK Property Finance Remains Resilient – Investors Should Take Note

For investors, the UK property finance market remains both robust and resilient. The fundamentals driving demand haven’t changed – there is still an undersupply of housing, and the government remains committed to catalysing growth in the sector.

While large-scale projects remain dependent on planning approvals, which can be a bottleneck, smaller-scale developers are forging ahead with repurposing and retrofitting projects. Demand for alternative finance solutions, particularly bridging and Buy-to-Let funding, continues to be strong, reflecting a market that is adapting to affordability challenges rather than stalling because of them.

With mortgage availability improving and investor confidence holding firm, the housing sector remains a key area of opportunity – but strategy will depend on how the upcoming economic updates shape affordability and financing conditions.

As we enter a critical period of macroeconomic updates, market participants should remain agile and well-positioned to move when the right opportunities arise.