Semi-commercial lending volumes will top £1.0bn for the first time this year, according to commercial mortgage lender and bridging specialist TAB.
The inaugural Mixed-Use Mortgage Monitor from TAB 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%.
"There are more deals being done. There is more money being lent. Borrower appetite is strong," said Duncan Kreeger, founder and chief executive of TAB (pictured).
"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."
The report also estimates that transaction volumes increased by 13 per cent 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 per cent year-on-year, with lenders now offering 94 dedicated semi-commercial and mixed-use mortgage products.
Kreeger, noted, “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.
“While lender numbers dipped briefly in early 2026 following the exit of one specialist lender from the market, they recovered to a new high of 28 by the end of Q2 as three new specialist propositions launched. 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.
He added, “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.”
The tracker found average loan sizes have risen by around 6 per cent 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 per cent to 67 per cent and liquidity is healthy for well-structured deals (70 per cent 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 per cent after peaking at 6.85 per cent in Q1 2026.
Kreeger said, “Compared to standard commercial mortgages, the pricing of loans and fees across the semi-commercial segment is wide, reflecting the diversity of assets and the complexity of valuation. High street banks remain able to price keenly where they choose to compete; challenger and specialist lenders operate in a wider, publicly quoted band from around 6.0 to 9.0 per cent, with pricing reflecting the complexity of the asset. ”
TAB's own product is offered on a variable basis at Bank Rate plus 3.5 per cent – currently 7.25 per cent.
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.
Kreeger said, “At the rate the market is growing, with the value of deals growing 14 per cent over the last quarter, we expect – assuming current growth continues – that annual lending to exceed £1 billion by the end of 2026.”
He concluded, “Semi-commercial lending is one of the most overlooked parts of the specialist finance market. While it sits between residential buy-to-let and larger commercial property lending, until now there has been very little consistent data tracking developments in the sector. The Mixed-Use Mortgage Monitor will shine a light on this forgotten corner of the specialist market.”
The Mixed-Use Mortgage Monitor from TAB is intended to provide a quarterly measure of activity in the UK's first-charge semi-commercial mortgage market, covering lending secured against mixed-use property where residential and commercial uses coexist within a single security.
The index draws on published lender rate cards, product launch announcements and TAB's own transaction data. Where market-wide figures are not separately published by any trade body, TAB's estimates are informed by observed lender entries and exits, directional pricing movements, and TAB's own origination experience. The index excludes short-term bridging loans with terms under 25 months.
