Why the future of ‘short term loans’ is looking bright in 2024

As a lender we’ve certainly hit the ground running this year and can report a greater number of enquiries at Alternative Bridging Corporation for secure lending than 12 months ago. This has not just been for one type of product but across the board. Clients have been equally considering bridging finance, development finance as well as term loans. We can therefore say with some confidence that we expect growth in our short-term lending in 2024.

The picture 12 months ago

There are several reasons behind our prediction. Firstly, while business and property investor confidence isn’t anywhere near record levels, it is noticeably stronger than at the start of 2023. At that time, we were still dealing with the fallout from the so-called ‘mini-Budget’ of the short but disastrous Liz Truss premiership. Property finance providers had spent the final quarter of 2022 pulling products from the market and come 2023 were still struggling to replace them. The significantly fewer products available were as a rule more expensive.

At the same time, the population was also having to deal with the cost-of-living crisis – inflation was soaring and energy bills were skyrocketing. People were finding life was much more costly than they had been used to; it’s no wonder that consumer confidence – and consequently demand for property finance – took a noticeable dent.

So, what has changed?

While most of the above factors haven’t been reversed, we do appear to have seen the worst. For example, inflation is still historically high but has fallen noticeably over recent months. Indeed, analysts at Investec and Deutsche Bank and the Oxford Economics consultancy have forecast that the consumer prices index (CPI), which fell to 3.9% in November 2023, will fall below 2% by May. Compare that to the double-digit rates of inflation that we had to contend with for the majority of 2023.

Expectations in the financial markets are now on a Base Rate cut in April and many expect another five cuts before the end of the year. This would mean the Bank Rate would be below 4% for the first time since January 2023.

Meanwhile, energy prices have also peaked, while borrowers have benefitted from the fall in swap rates being passed on by lenders in December and January. Things are markedly different to 12 months ago.

Our expectations

At Alternative Bridging Corporation, property finance has been in our blood for over 30 years. With all our combined knowledge and experience, we expect growth in short-term lending this year. Despite improvements in the economy, we recognise that there will still be a fair amount of uncertainty, especially with regard to the cost of borrowing. That’s why we recently introduced our Alternative Term Loan. It stands out in the market because it has no Early Repayment Charges (ERCs). It means borrowers can move quickly if rates reduce and the market changes, without having to pay a penalty. Not something one can ordinarily do with a term loan product.

We look at providing products to support property investors and business owners both today and in the future. We’re confident we are doing just that with our current short-term loan offering. That’s why we’re expecting our lending volumes to rise in 2024.