Blink and it will have changed. That’s the way mortgage rates used to be.
In recent months, prices have been dominated by ups and downs as global economic fluctuations continue, which has had knock-on effects on the way people look at financing new real estate investments.
Meanwhile, 10- and 30-year government bond yields rose to their highest levels in decades, and the Bank of England’s key interest rate has remained at 3.75% for the full year so far. It is not far-fetched to assume that it is only a matter of when the MPC majority will vote in favor of the increase, and not whether this is the first time the MPC majority has voted in favor of the increase.
A few things point to higher demand until the end of 2026
Swap rates also do not stand still, and every time geopolitical tensions erupt, lenders sense it and raise interest rates in response, leading to a gradual upward trend in interest rates.
Price volatility in the real estate finance market has led to the unintended consequences of an in-principle decision no longer being applicable by the time an application can be submitted, products being withdrawn, or price adjustments and recalibration being applied in the middle of restructuring the financing of the property.
This makes it difficult for retail clients and real estate investors to see their mortgage application completed without a bump in the road.
Price action
Regarding residential real estate, the growth in house prices has also dampened investor sentiment and made buyers hesitant.
According to Rightmove data for August, newly listed house prices fell by about 2% month-on-month, and were down 1% year-on-year.
With transaction volumes still fairly weak, more homeowners and developers will likely turn to bridging to complete on a timeline that suits them.
For some time, sentiment has been that the market has bottomed out and that a reversal in housing prices will be seen again soon (albeit at a much slower rate than in the 1990s), but there are signs that stabilization may continue.
There is also a growing gap between the time a property spends on the market in the north and in the south. The outlook for house prices in the north is more positive, which means that homes naturally tend to sell more quickly as demand rises in the northern regions. According to Zoopla, the ten fastest selling regions are all in Scotland.
Perhaps the only real positive for activity in the housing market is that new Prime Minister Andy Burnham has ruled out 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 coming months.
Against this backdrop, timelines are more difficult to rely on than usual, whether due to price fluctuations, a pending increase in the underlying price, selling times, valuation miscalculations, or simply investor sentiment. As a result, the number of interruptions in the chain has been greater than usual, and sellers are holding on to higher values than they might realistically be willing to obtain, while buyers and investors bide their time.
More developers are exiting their development loans through bridging
All of these circumstances make bridge financing a strong option when timing is important. More buyers, sellers and developers are using it to set their own schedule and get things done on their own terms, rather than waiting on someone else’s terms.
Regulated bridging, once a fallback option, has become a popular way to maintain vulnerable buying traffic. Financial Conduct Authority data shows the regulated market recorded £1.83 billion across 4,691 loans in 2025 – almost double the figure in 2021.
Figures for early 2026 in England suggest volumes are slightly ahead of last year. As long as market volatility remains and chain breaks are common, interest in bridge financing is likely to continue to grow.
Market fluctuations
Currency depreciation and market volatility have also been a thorn in the side of developers in 2026. Many have built their exit plan around selling a certain number of units before their development loan matures. With sales slower than expected, some are not meeting their target and will face a penalty fine.
Against this background, timetables are more difficult to rely on than usual
Meanwhile, the undervaluation of unsold shares is contributing to this trend, as some developers have to consider discounting units. Rather than accepting these terms or selling into a soft market at the wrong time, more developers are exiting their development loans through bridging. For those who are willing to take the risk, they can buy time to sell the remaining units at a price that works on their own schedule.
Some things point to meeting the increased demand until the end of 2026. And it does not look like price volatility will stabilize soon. Lower prices create opportunities for buyers with money. As transaction volumes remain fairly weak, it seems likely that more homeowners and developers will turn to bridging to complete transactions on a timeline that suits them, rather than as a last resort.
Lucy Waters is Managing Director of Aria Finance
This article appeared in the September 2026 edition of Mortgage strategy.
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