Bridging Watch: We’ll keep riding to the rescue – Mortgage Strategy
Blink and it will have changed. That’s the way mortgage rates have been.
In recent months, ups and downs have dominated pricing as global economic volatility persists, which has had knock-on effects on how people look to finance new property investments.
Meanwhile, 10- and 30-year gilt yields have risen to their highest levels in decades and the Bank of England base rate has remained at 3.75% for the entire year so far. It’s not farfetched to assume that it’s only a matter of when, and not if, the Monetary Policy Committee majority votes for an increase.
A few things point to demand rising to the end of 2026
Swap rates have also not stood still and, every time geopolitical tensions flare up, lenders feel it and push up their rates in response, leading to a gradual upward trend in rates.
The rate volatility in the property finance market has resulted in the unintended consequences of a decision-in-principle no longer applying by the time an application can be made, products being withdrawn, or rate adjustments and recalibrations being applied in the middle of structuring finance on a property.
This makes it difficult for retail customers and property investors to watch a mortgage application go all the way to completion without hiccups en route.
Price movement
As it relates to residential property, house-price growth has also put a dampener on investor sentiment and made buyers reluctant.
According to Rightmove data for August, newly listed house prices were down around 2%, month on month, and down 1%, year on year.
With transaction volumes still fairly weak, it looks likely that more homeowners and developers will turn to bridging to complete on a timeline that works for them
For some time the sentiment has been that the market has bottomed out and that the reversal of house prices will be seen again soon (albeit at a much slower rate than in the 1990s), but there are signs that indicate a potentially extended plateau.
There is also a growing gap between the time a property spends on the market in the North and in the South. House-price projections in the North are much more positive, which means houses naturally tend to sell more quickly with demand higher in northern regions. According to Zoopla, the 10 fastest-selling areas are all in Scotland.
Perhaps the only real positive for activity in the housing market has been new prime minister Andy Burnham’s ruling-out of stamp duty reform in October’s Autumn Budget. At least for now, buyers and sellers don’t have a property tax change to worry about in the upcoming months.
Against this backdrop, timelines are much harder to rely on than usual, whether due to rate fluctuations, a pending base-rate increase, selling times, valuation miscalculations, or simply investor sentiment. As a result, there have been more chain breaks than usual and sellers holding out for higher values than they are perhaps realistically set to get, while buyers and investors bide their time.
More developers are exiting their development loan through bridging
All these circumstances are making bridging finance a strong option when timing is of importance. More buyers, sellers and developers are using it to set their own schedule, get things done on their own terms, rather than wait on someone else’s.
Regulated bridging, which used to be more of a fallback option, has become a common method of keeping an otherwise at-risk purchase moving. FCA data shows the regulated market wrote £1.83bn across 4,691 loans in 2025 — roughly double the 2021 figure.
Figures for early 2026 in England suggest volumes are running slightly ahead of last year. As long as market volatility remains and chain breaks are common, interest in bridging finance is likely to continue growing.
Market volatility
Downvaluations and market volatility have also been a thorn in the side of developers in 2026. Many built their exit plan around selling a certain number of units before their development loan matured. With sales slower than expected, some are falling short of their target and will face a penalty charge.
Against this backdrop, timelines are much harder to rely on than usual
Meanwhile, valuation shortfalls on unsold stock are contributing to this trend, with some developers having to think about discounting units. Rather than accept those terms or sell into a soft market at the wrong time, more developers are exiting their development loan through bridging. For those willing to take the risk, it can buy time to sell the remaining units at a price that works on their own schedule.
A few things point to bridging demand rising to the end of 2026. Rate volatility doesn’t look like it’s settling down soon. Falling prices are creating opportunities for buyers with funds. And, with transaction volumes still fairly weak, it looks likely that more homeowners and developers will turn to bridging to complete on a timeline that works for them, rather than as a last resort.
Lucy Waters is managing director of Aria Finance
This article featured in the September 2026 edition of Mortgage Strategy.
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