Reed Smith In-depth

Key takeaways

  • Resilience in challenging conditions: The UK housing and mortgage markets are showing notable resilience despite persistent economic headwinds, including high interest rates, inflation, and subdued consumer confidence. The prime housing segment remains stable, but the buy-to-let sector is under pressure, with more small landlords expected to exit the market.
  • Policy and regulatory developments: Government measures to tackle the housing affordability crisis have yet to deliver significant change, with slow planning processes, tax burdens, and a shortage of skilled labour continuing to hamper progress. Regulatory adjustments – such as relaxed lending caps and clearer affordability checks – are supporting product innovation, particularly among specialist lenders.
  • Technology and product innovation: Advances in technology and the adoption of AI are streamlining mortgage origination, underwriting, and customer service, with specialist lenders leading the way. New products, including green mortgages, Sharia-compliant finance, and second charge loans, are broadening access and meeting the needs of a more diverse range of borrowers.
  • Sustainability and investment trends: Sustainability is moving to the forefront of housing policy and investment, with stricter energy efficiency standards and large-scale retrofitting on the horizon. Institutional investors are increasingly focused on green finance and retrofitting opportunities, while securitisation and risk transfer remain key tools for funding and managing capital.

The 2025 DealCatalyst UK Mortgage Finance Conference convened key stakeholders to assess a resilient market amid high interest rates and inflation. Prime lending remains steady, while buy-to-let faced pressure and rising landlord exits. Discussions focussed on housing policy challenges under the new Labour government – planning bottlenecks, skills gaps, and tax issues – contrasted with EU progress ahead its 2026 Affordable Housing Plan. Speakers highlighted product and funding innovation driven by regulatory clarity (including on loan-to-income (LTI) and affordability); digitisation and artificial intelligence (AI) across origination and underwriting; and growth in specialist segments such as Islamic finance, bridging, and second charge lending. Sustainability featured strongly, with energy-efficiency standards, and retrofitting influencing pricing and risk. Investor panels emphasized the central role of securitisation and risk transfer, Basel 3.1 implications, and the growing bank-non-bank collaboration to deliver tailored credit and better consumer outcomes.