Annual lending secured against mixed-use property could exceed £1 billion for the first time this year, according to estimates from TAB.
The commercial mortgage lender and bridging specialist estimated that £242 million of semi-commercial lending was completed in the second quarter of 2026, compared with £201 million in the same period last year — an increase of about 20%.
The figures appear in TAB’s inaugural Mixed-Use Mortgage Monitor, which is intended to provide a quarterly measure of the UK’s first-charge semi-commercial mortgage market.
Transaction volumes were estimated to have risen by 13% over the same period, from about 415 completions in the second quarter of 2025 to 470 in the latest quarter.
Duncan Kreeger (pictured), founder and chief executive of TAB, says: “There are more deals being done. There is more money being lent.
“Borrower appetite is strong.”
Average loan sizes increased by about 6% year on year, from £484,000 to £515,000, which helped the value of lending to rise more quickly than the number of transactions.
SPECIALIST LENDERS EXPAND
TAB attributed some of the growth to high-street banks withdrawing from smaller and more complicated commercial transactions, leaving specialist lenders, challenger banks and building societies to take a larger share of the market.
The number of active lenders increased from 25 to 28 over the year to the end of June, according to the monitor. The number of dedicated semi-commercial and mixed-use mortgage products rose by almost 20% to 94.
Kreeger says: “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.”
He said some experienced residential landlords were also turning to mixed-use property as they sought to diversify their portfolios and improve the resilience of their income.
Kreeger says: “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.”
RATES EASE FROM FIRST-QUARTER PEAK
Average loan-to-value ratios rose from 64% to 67% over the year. TAB said liquidity remained healthy for well-structured transactions involving experienced borrowers and diversified income, although lenders continued to price cautiously at higher leverage.
Average headline fixed rates eased to about 6.70% after reaching 6.85% in the first quarter of 2026. Challenger and specialist lenders were quoting rates ranging from about 6.0% to 9.0%, depending on the asset and the complexity of the transaction.
TAB’s own variable-rate product is priced at Bank Rate plus 3.5 percentage points, giving a current rate of 7.25%.
The lender expects further growth during the second half of the year as challenger banks compete across a wider range of loan sizes and specialists introduce more products combining bridging and term finance.
Kreeger says: “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.”
The monitor covers mortgages secured against property in which residential and commercial uses coexist within a single security. It excludes bridging loans with terms of less than 25 months.
TAB said its estimates were based on published lender rate cards, product announcements and its own transaction data. No trade body publishes separate market-wide figures for the sector, so the estimates also draw on observed lender entries and exits, pricing movements and TAB’s origination experience.
