Annual lending forecast to exceed £1 billion for the first time by year-end
UK semi-commercial mortgage lending reached £242 million in the second quarter of 2026, a 20% increase from £201 million recorded in the same period last year, according to the inaugural Mixed-Use Mortgage Monitor published by specialist lender TAB.
The report, which tracks first-charge semi-commercial mortgage activity across lending volumes, product availability and pricing, found that deal volumes rose 13% year-on-year, from 415 completions in Q2 2025 to 470 in Q2 2026. Average loan sizes grew by approximately 6% over the same period, from £484,000 to £515,000.
Based on current quarterly growth rates, TAB projects that annual semi-commercial lending will surpass £1 billion for the first time before the end of 2026.
"For a dynamic market that has been growing so rapidly, semi-commercial lending has been surprisingly under-analysed," said Duncan Kreeger (pictured right), chief executive and founder of TAB.
The number of active lenders in the segment increased from 25 to 28 over the year. Three lenders launched dedicated semi-commercial propositions during Q2 2026, partly offsetting the contraction that followed the closure of Market Financial Solutions.
Lenders now offer close to 95 dedicated semi-commercial mortgage products, incorporating both fixed and variable rate options. Product numbers have risen by 18% year-on-year, contrasting with a slight contraction in the wider mortgage market. According to Moneyfacts, the total number of residential mortgage products stood at 7,132 in June 2026, down from 7,537 in February 2026 and representing only a 4% annual increase.
Average headline fixed rates stood at approximately 6.65% in Q2 2025 before easing to 6.55% in Q3 2025. They subsequently climbed to 6.85% in Q1 2026, driven by swap rate pressure during a period of broader market volatility, even as the Bank of England base rate held at 3.75%. A series of competitive repricing moves by individual lenders from January through to June brought the average back to 6.7% by the close of Q2 2026. Prime pricing now sits broadly between 6% and 8.5%, with challenger and specialist lenders quoting a wider band of roughly 6% to 9%.
Average loan-to-value ratios increased from 64% to 67% over the period. The report notes that while liquidity remains healthy for well-structured deals — those featuring 70% LTV, diversified income and experienced borrowers — lenders are applying caution at higher LTV levels.
The report identifies two principal drivers of market activity: refinancing by borrowers replacing loans originated during the low-rate environment of 2021 and 2022, and growing demand from experienced residential landlords seeking to diversify into mixed-use assets. "To these investors, semi-commercial investment can be a stepping stone into the world of commercial property," Kreeger said.
Looking ahead, TAB expects challenger banks and specialist non-balance-sheet lenders to capture a larger share of new origination, serving borrowers with more complex assets, mixed income streams or time-sensitive requirements. The report also anticipates convergence between bridging and term finance, with integrated bridge-to-term products likely to develop as borrowers seek a more seamless route from acquisition to longer-term investment finance.
The Mixed-Use Mortgage Monitor, published quarterly, covers loans secured on mixed-use property with a commercial element of at least 20%, and excludes bridging loans with terms of fewer than 25 months and very large commercial loans that could technically be classified as mixed-use.
"We hope this report provides valuable insight into a part of the market that deserves far greater attention," Kreeger said. "As the sector develops, the Mixed-Use Mortgage Monitor will track the changes that matter and provide an independent benchmark for the industry."
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