The resilience of property-backed private lending

Louis Alexander (pictured), chief executive of Somo, underlines the resilience of private credit amid macroeconomic uncertainty…

As Somo completes its 10th year of successful trading I have been thinking about the importance of financial resilience – particularly in times of political uncertainty.

In the wake of President Trump’s tariff announcements and subsequent volatility – the S&P 500 lost over 10 per cent in just two days – I wanted to take a moment to look at the performance of private credit compared to the stock market over the last decade – particularly private lending backed by property.

Private credit has demonstrated resilience during periods of market turbulence for many years. In the UK, the private credit market has expanded at a cumulative annual growth rate of 21 per cent, surpassing the US rate of 14 per cent. This growth is driven by increased institutional and larger investor demand for high-return, alternative lending, especially in the property sector.

Over the past 10 years, private credit has outperformed the stock market (S&P 500) consistently, providing higher, more stable returns. Notably, while the stock market has seen its share of volatility, private credit has provided investors with solid returns year after year – often outperforming other types of lending such as corporate loans or high-yield bonds in the process.

This resilience makes private credit a strong contender for diversification, especially in times of market uncertainty. Unlike equities, which can fluctuate dramatically, Somo has offered steady returns with far less exposure to market swings.

Our social investors already know the power of private credit – they’ve been earning strong, stable returns for over a decade. In unpredictable times, smart money moves towards certainty. In today’s climate, sophisticated investors are increasingly favouring the predictability and strength of asset-backed lending, avoiding the turbulence of traditional markets. It’s a strategy built not just for growth, but for resilience.

With Somo’s annual returns at 10.2 per cent per annum, and returns as high as 13.2 per cent and all loans secured by a short-term mortgage over the property, the sector is set to grow by around 40 per cent by the end of 2028. Private lending in 2025 and beyond is looking very promising indeed.