UK semi-commercial mortgage lending hits a £1bn annual run rate — but rising swap rates are set to test Q4 growth
Lending on semi-commercial properties hit £250m in Q3 2026. For the first time since tracking began in Q1 2025, the market is running at an annualised rate of £1bn.
The figures come from the Mixed-Use Mortgage Monitor, published by specialist lender TAB. Lending was 3% ahead of Q2 and 14% above Q3 2025, a slight easing from the 20% year-on-year growth recorded in Q2. Since Q1 2025, when quarterly lending stood at £184m, the market has expanded by 36%.
The numbers make a clear case for brokers weighing a move into this space. Thirty lenders were active in Q3, up from 25 at the start of 2025.
The product count reached 99, a 5% rise on Q2. Two lenders entered during Q3; none left.
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What is driving broker activity in semi-commercial?
Much of the Q3 uplift came from lenders whose ranges went live in May and June. Applications typically take eight to 12 weeks to reach completion, so that pipeline landed between July and September. Refinancing from bridging onto longer-term debt added further volume.
“We’ve seen another two lenders, both rooted in bridging, moving into longer-term semi-commercial lending — these lenders want to keep hold of borrowers when they refinance away from bridging loans,” said Duncan Kreeger (pictured above), chief executive of TAB. “Let’s not forget the market has also absorbed a significant exit: MFS entered administration in February 2026, contributing to a dip in lending in Q1.”
Average loan sizes fell 1% to £510,000 as newer entrants focused on smaller deals. The average loan-to-value (LTV) ratio dipped to 66.5%, from 67.0% in Q2. The keenest pricing was reserved for deals at or below 65% LTV.
Should brokers watch swap rates rather than base rate?
The average headline fixed rate fell to 6.65% in Q3, from 6.70% in Q2. The modest improvement conceals a sharper swing. Established lenders cut rates by up to 75 basis points in July and August. New entrants priced as high as 7.99%.
Then in September, two-year swap rates broke above 4.70%. High street lenders repriced twice; most specialist lenders had not yet followed by quarter end.
This dynamic is one the Monitor has tracked before. In Q1 2026, rising swap rates pushed specialist pricing higher despite an unchanged Bank Rate. The rise in commercial mortgage demand recorded this year shows how broader funding costs, not base rate alone, drive semi-commercial pricing.
“The Bank Rate stayed at 3.75% throughout Q3. While that is 25 basis points lower than a year ago, the average semi-commercial rate is 10 basis points higher,” Kreeger said. “The gap has widened from 2.55 percentage points in Q3 2025 to 2.90 percentage points now.”
“Anyone with a fixed rate ending in the next six months should be talking to a broker now rather than waiting for a miracle from the Bank of England.”
TAB expects Q4 growth to continue, but more slowly. September’s swap-rate rise is expected to push specialist lenders to unwind some of the summer’s cuts.
What does Q4 hold for semi-commercial borrowers?
The two lenders that entered in mid-September should contribute completions from Q4 onwards. TAB also secured a new £200m funding facility from a challenger bank in September. The lender says the capital will allow it to move faster on deals and lend more aggressively into the market.
With 30 lenders and 99 products, semi-commercial remains specialist. Borrowers have a fraction of the choice available in residential or buy-to-let. The broker who understands which lenders will consider a particular mix of commercial and residential space is, as this market grows, increasingly hard to replace.
