Economic roundup of 2023 and what’s in store for 2024 for property finance

When people deal with Alternative Bridging Corporation for secure lending.  We build a relationship with them, forming a clear picture of their current circumstances and plans – beyond just the property involved in the transaction. This provides us with a wider insight and a good idea of market sentiment.

What have we learned from a difficult year in 2023?

When we analyse the conversations with all our clients, as well as brokers and other industry professionals. It’s clear that 2023 will not go down in the annals of history as a vintage year for the property market. With high inflation, the cost-of-living crisis and borrowing costs continuing to rise through the first three-quarters of the year. Affordability was a real issue for those looking for property finance, as well as those making repayments on their loans.

In total, there were 14 consecutive meetings of the Bank of England’s Monetary Policy Committee (MPC). From December 2021 to August 2023 where rates were increased. They reached their peak in October 2023 at 5.25%, and since then they have thankfully been held at that rate.

What challenges do property bridging finance specialists face in 2024?

Many commentators believe we have hit the ceiling as far as the Bank Rate goes and understandably this is music to the ears of property professionals. That said, this could be wishful thinking as we really don’t know what the interest rate environment is going to look like in 2024. While rates have remained at 5.25% since October, in the past three months there have been three members of the nine-strong MPC who have wanted to raise rates (in October, they voted for a 0.50 percentage point rise instead of the prevailing 0.25 one). It will only take two members to join the hawks and there will be a majority for further rate hikes.

While the US Federal Reserve has signalled that it expects to lower interest rates three times in 2024.  The Bank of England said in December that it expects our rates to stay at high levels for “sufficiently long” to tackle inflation and get it back to the government’s 2% target. In other words, don’t expect us to follow the US.

How can we adapt?

It’s unlikely that the market – or the economy as a whole – is going to significantly improve in 2024. Therefore, those property investors who have weathered the storm this year would be well advised to continue with their same strategy in 2024. Over the past year, landlords have been looking towards higher yielding assets.  For example, holiday lets, HMOs and semi-commercial – and these areas are expected to remain relatively strong over the next 12 months.

At Alternative Bridging Corporation, secure lending and property finance is our raison d’être. We adapt with the times and look to provide products that suit investors in the current market conditions.  That’s why we’ve just re-launched our new Alternative Term Loan, which lets borrowers take out a loan for longer than a bridge, knowing that they can move quickly and without penalty to a longer-term product. That’s because there are no Early Repayment Charges (ERCs). When no one knows right now which way interest rates are going to go in 2024.  We want to offer flexibility so they can quickly adapt when the market changes.

While the next 12 months probably won’t be the easiest ones for property investors, there’s no need for doom and gloom. A sensible strategy, coupled with the right products from forward-thinking lenders that offer secure lending such as Alternative Bridging Corporation. Should allow borrowers to make the most of opportunities as and when they arise.