Semi-commercial lending volumes will top £1bn for the first time this year, according to commercial mortgage lender and bridging specialist TAB.
Its inaugural 'Mixed-Use Mortgage Monitor' estimates that total UK semi-commercial lending reached approximately £242m during Q2 2026, up from £201m in the same period last year, representing annual growth of around 20%.
The report also estimates that transaction volumes increased by 13% over the same period, from approximately 415 completions in Q2 2025 to 470 in Q2 2026.
TAB suggests this growth reflects mainstream banks stepping back from smaller and more complex deals, creating opportunities for challenger banks and specialists – while experienced residential landlords diversify into mixed-use assets for better income resilience.
According to the index, the number of active lenders operating in the sector has increased from 25 to 28 over the past year, while product choice has expanded by almost 20% year-on-year, with lenders now offering 94 dedicated semi-commercial and mixed-use mortgage products.
The tracker found average loan sizes have risen by around 6% year-on-year, from £484,000 to £515,000, helping total lending values increase faster than transaction volumes.
While average LTVs have risen from 64% to 67% and liquidity is healthy for well-structured deals (70% LTV, diversified income, experienced borrowers), the market is pricing in caution around higher LTVs.
Despite pressure from higher borrowing costs, fixed rate pricing has become increasingly competitive during 2026. Average headline rates have eased to approximately 6.70% after peaking at 6.85% in Q1 2026.
Looking ahead, TAB says it expects the market to grow steadily during the second half of 2026, with challenger banks increasing their presence across a wider range of loan sizes and specialist lenders developing more products combining bridging and term finance.
Duncan Kreeger, founder and CEO of TAB, said: “There are more deals being done. There is more money being lent. Borrower appetite is strong. The semi-commercial market has grown by more than 30% since we first started monitoring it in Q1 2025. As a result, I think there’s a good chance the semi-commercial segment could hit the £1bn this year.
“While the market is starting to mature, it’s also becoming increasingly specialist. Mainstream high-street banks scaled back complex commercial lending significantly after 2008, creating space for a wave of challenger banks and specialist lenders that has continued to expand ever since. Mainstream banks are now focusing on larger relationship managed customers with challenger banks, specialist lenders and – to an extent – building societies taking a larger role.
“Specialist lenders are filling the gap left by the long-term retreat of high-street lenders from smaller and more complex mixed-use transactions - bringing momentum to lending.
“Refinancing of older low-rate loans is supporting activity to a degree. But we are seeing more demand for mixed-use finance from investors who have traditionally focused on the residential market alone – investors who want to diversify their portfolios now. Borrower demand for well-structured mixed-use deals is growing, particularly from experienced landlords disappointed by under-performing residential portfolios who are looking to start moving into commercial. At the same time, lender competition is increasing, giving brokers and borrowers more choice than they had a year ago. That’s also forcing lenders to provide better service – in our case offering our mortgages at bridging speed.
“At the rate the market is growing, with the value of deals growing 14% over the last quarter, we expect – assuming current growth continues – annual lending to exceed £1 billion by the end of 2026."
