Specialist Property Finance: Making Sense of the Chaos

For the last two years, borrowers have been asking one question: “When will rates come down?”

Fair enough. The Base Rate matters. Swap rates matter. The cost of finance matters. For investors and developers, the cost of debt can be the difference between a deal working and a deal quietly disappearing into the “numbers don’t stack” pile.

Right now, there is a better question: “What assumptions are lenders still prepared to believe?”

Because that is where the market has changed.

For all the market chaos since the US-Israeli attacks on Iran on 28^th Feb, finance IS still available. Deals ARE still being done. Investors ARE still buying. Developers ARE still looking at sites. Landlords ARE still refinancing. And lenders ARE still issuing terms and offers.

But today’s market is definitely less forgiving.

This Week’s Bank of England Decision – expect no change

The next MPC decision is due this Thursday, 30^th April. The Base Rate stands at 3.75%, with CPI inflation at 3.3%, an uptick from 3.0% in February, and still well above the 2% target.

As things stand, the market appears to see a hold as overwhelmingly likely.

But as we saw during March, market pricing can move quickly, driven by sentiment and swap market volatility. 

But the direction of travel is clear enough – a rate cut this week looks highly unlikely.

The messaging from the Bank of England is essentially: “We’re watching inflation, energy prices and wage pressures very carefully.”

That is not the message borrowers were hoping for.

The Data Is Mixed – Which Is Exactly the Problem

The UK economy is not falling off a cliff. GDP grew by 0.5% in February, and construction grew by 1.0%. That is clearly relevant for anyone involved in property and development.

But inflation has moved the wrong way.

CPI rose to 3.3% in March, up from 3.0% in February. Unsurprisingly, fuel was a major driver, and fuel is never just ‘fuel’ in the property market. It feeds into transport, labour, utilities, materials, delivery costs and general confidence.

The labour market is also softer. Unemployment has increased, vacancies have fallen, and while wages are still rising, real pay growth is hardly strong enough to create a wave of confidence.

So the Bank of England is stuck.

Cut rates too soon, and it risks looking complacent on inflation.

Stay tighter for longer, and it risks squeezing households, businesses and borrowers already short of breathing room.

That is why the borrowing market feels cautious.

The Housing Market is Not Dead

Mortgage approvals for house purchase have increased, and remortgage activity has also picked up (see my previous articles on why 2026 is such a bumper year for remortgages). 

So buyers and borrowers are still active. But activity is not the same as confidence.

House prices have shown resilience, but affordability remains the gatekeeper. Higher mortgage rates, stretched household budgets and cautious buyer sentiment all feed directly into what people can pay – and what lenders are prepared to support.

For investors, rental coverage matters more.

For developers, GDV assumptions need to be challenged, not flattered.

For anyone refinancing, leaving the conversation until the last minute is a very poor strategy.

Adding Insult to Injury for Landlords – the Renters’ Rights Act

The first major changes are imminent, and landlords need to treat this as more than a legal update. It is a business-model issue.

The abolition of Section 21 no-fault evictions, new periodic tenancies, new rules around rent increases, pets and tenant rights – all of this changes the operating environment.

Good landlords shouldn’t panic. Professional, well-capitalised landlords with decent properties, proper documentation and sensible tenant management (and a good broker!) will adapt.

But more-casual landlords may think again.

Some will sell. Some will deleverage. Some will stop buying. Some will wait to see how the new rules work in practice.

From a finance perspective, this matters because lenders are not just underwriting the property. They’re underwriting the sustainability of the income.

Developers Are Pausing for Good Reasons

Developers face the same issue. It’s not simply a question of whether funding is available. It’s whether the assumptions still stack up under stress-testing.

Build costs. Labour. Fuel. Materials. GDVs and sale prices. Construction risk. Contingency.

All of these matter much more, when the market is less forgiving.

I have seen this directly with a client looking to refurbish a historic property in East Anglia. It is a strong project. A proper local building, a sensible vision, and the sort of scheme that ought to be deliverable. But the client has paused temporarily. Not because the opportunity has disappeared. Because uncertainty around fuel prices, materials and wider market confidence has made it harder to press the button with conviction.

This is not weakness. This is discipline by an experienced, professional developer who has seen it all before. In a rising market, optimism can hide a lot of sins. In this market, optimism needs evidence.

Specialist Lending Is Still Open – But Liquidity Matters

The same caution is showing up in bridging and development finance. Good lenders are still lending. Strong cases still attract interest. But the market is more selective.

Smaller lenders are under pressure where their own funding depends on investor appetite. If investors are sitting on the sidelines, waiting for markets to calm down, that affects liquidity.

Another client was preparing to use a previous lender to fund a new development project. But the lender has told the client that they simply don’t have the funds to lend to him. And it’s only around £1 million, so not huge. The frankness from this lender has actually been quite admirable in my opinion – not all lenders would be quite so transparent…

The recent collapse of specialist lender MFS has not helped sentiment in the bridging sector. It would be wrong to suggest one lender’s failure represents the whole market – but it has reminded borrowers of something important:

A lender’s appetite is only useful if the lender can actually fund the loan.

So borrowers should not look only at the headline rate, arrangement and exit fees, and maximum loan size.

They should also ask:

• Can this lender actually complete the deal?

• Is their funding secure?

• Will the terms still be there next month?

• What happens if the case takes longer than expected?

In this market, certainty has value. Sometimes the cheapest lender is not the best lender.

The Final Word

The borrowing market has not closed. It has just become more cautious.

There is still money available. Deals are still getting done. There are still opportunities for investors and developers who know what they’re doing.

But the market is asking harder questions. And borrowers need good answers.