The Lending Scene in 2025 and What Bridging Trends Could Be on Their Way in 2026

Property investors faced another dramatic year in 2025. Every year brings with it political and economic developments, but this was really one for the books. A few obvious examples will come to mind for many, ones that affected lenders and borrowers alike.

Most recently, we had the Autumn Budget. It was widespread, but there were a few property-specific updates. First and foremost, there was the announcement of a “mansion tax” – a council tax surcharge on properties worth over £2m[1].

Also, income tax rates levied on property income will be hiked from April 2027 onwards. From that date, the basic, higher and additional rates of property tax will increase to 22%, 42%, and 47% respectively.

Elsewhere, we also had the arrival of the Renters’ Rights Act. It finally received Royal Assent in October, and the government confirmed the first set of changes under the Act will come into play from May 2026[2].

These two key developments have had a major impact on investor and homebuyer demand this year, which in turn influenced lenders and bridging trends. Although, there has been a clear difference between what’s been seen in the mainstream lending market, and the bespoke world.

The broad lending market in 2025

According to the Bank of England, seasonally adjusted mortgage approvals have remained relatively flat throughout 2025. Its most recent data showed that appetites may have softened as we approached the final months of the year. In October, net mortgage approvals for house purchases decreased by 600 to 65,000, while approvals for remortgaging fell by 3,600 to 33,100, the lowest figure seen since February 2025[3].

Data from UK Finance shows similar results for the BTL lending market. Its latest results showed that in Q2, there were 49,590 new BTL loans advanced in the UK, worth £8.8 billion, down by 2.6% on the same period in 2024[4].

Unlike in previous years however, these subdued results may not be the result of lender hesitancy, but instead could be influenced by weary borrowers. The pandemic fallout, coupled with the infamous 2022 mini-Budget, forced lenders to tighten their lending criteria[5], and pull products from the shelves[6].

But, in 2025, household secured credit availability has consistently risen[7]. At the same time, demand for secured lending for house purchases and remortgaging remained relatively stagnant. Much of this lack of demand came directly from Autumn Budget fears.

Many adopted a “wait-and-see” stance in the run up to the Budget[8]. Now that we know where we stand, perhaps we’ll see demand ramp up again in the final weeks of 2025, and into 2026.

What about bridging trends?

Despite how the wider lending scene fared in 2025, the specialist market had a great year. Looking at bridging trends, we can see that new bridging loan completions totalled £2.8 billion in the first quarter, and new applications surged to £18.34 billion, up 55.3% on the final months of 2024[9]. This momentum continued throughout the year, with the total value of lender loan books climbing for a third consecutive quarter in Q3, hitting £13.7 billion[10] – a new record.

Bridging trends were especially driven by landlords this year. One in 10 landlords [11]now hold a specialist BTL product and considering BTL companies are now the single biggest business type in the UK, thousands more are likely to need bespoke solutions over the coming months[12].

The question remains though, what are specialist borrowers specifically using the capital for? Separate research shows 20% of bridging loans were for investment purchases in Q3, up from 16% on Q2[13]. Following this, the next most-popular purpose was chain break at 18%, with 12% apiece coming from re-bridge finance, heavy refurbishment, and regulated refinance end-goals.

These were the results for the wider industry, but what about our own situation? We dove into our data recently as we assessed our 2025 results, and we found that our refinancing products were most requested by brokers and borrowers this year. Purchasing loans came in second place, followed by auction finance[14].

Looking ahead to 2026

We at least now know where we stand with the Renters’ Rights Act and the Autumn Budget, and we expect a wave of activity over the coming months. There will likely be a lot of selling as investors attempt to exit the market, but this may be equalled by entrepreneurial buyers. The challenges that stem from the Act and the Budget will linger, but many may be relieved that the announcements made thus far were not as bad as they could have been.

Regardless of how the property market evolves in 2026, we will be ready for it. Throughout the year, we have tweaked our existing product range to better suit the market’s needs, while also launching several new specialist loans. Recent examples include our “Core” BTL mortgages for more straightforward cases, and “Fusion Premier” loans for deals at the other end of the scale.

Moreover, we secured more institutional funding this year and are pushing to have a £3.5bn loan book by the time January arrives. As always, Market Financial Solutions plans to be there for all our brokers’ and borrowers’ investment plans over the coming 12 months.