Commercial mortgage advances have seen a notable increase in the third quarter of 2026, marking a 3% rise from the previous quarter. This growth indicates a strengthening market for semi-commercial mortgages, which is significant for landlords and investors looking to finance mixed-use properties.
What is Driving the Increase in Commercial Mortgage Advances?
According to Tab’s Mixed-Use Mortgage Monitor, the semi-commercial mortgage sector has experienced substantial growth, with lending values increasing by 36% since the first quarter of 2025. The market is now lending at an annualised rate of £1 billion. The increase in Q3 was attributed to a surge in lender activity during the spring months, with the number of active semi-commercial term lenders rising from 25 to 30. This influx included two new lenders entering the market, which has positively impacted competition and options for borrowers.
How Have Lending Trends Changed?
Despite the overall increase in advances, the pace of growth has slightly slowed, with year-on-year lending growth dropping from 20% in Q2 to 14% in Q3. Average loan sizes have also decreased by 1%, now standing at £510,000. However, this decline is somewhat offset by an increased appetite for larger loans in other areas of the market. The average semi-commercial mortgage rate has risen by 10 basis points, highlighting a divergence from the Bank of England’s base rate, which has remained stable at 3.75% throughout Q3.
What This Means for Landlords and Investors
The increased availability of semi-commercial mortgages is beneficial for landlords and investors, particularly those looking to finance mixed-use properties. The entry of new lenders, especially those transitioning from bridging finance to longer-term semi-commercial lending, suggests a more competitive environment. This could lead to better rates and terms for borrowers. However, the upward repricing of specialist lenders in response to rising swap rates may affect future borrowing costs, making it essential for landlords to stay informed about market trends and lender offerings.
What Should Borrowers Watch Next?
Looking ahead, borrowers should monitor the potential for further lender entries into the market, which could enhance competition and lead to more favourable lending conditions. Additionally, as specialist lenders may adjust their pricing in light of recent swap rate increases, it is advisable for borrowers to be proactive in seeking the best mortgage terms. Understanding the timing of product uptake—typically taking 8-12 weeks from application to completion—will also be important for those looking to secure financing in the coming months.
Frequently Asked Questions
What are semi-commercial mortgages?
Semi-commercial mortgages are loans that finance properties with both residential and commercial elements, such as a shop with flats above. They cater to landlords and investors looking to diversify their portfolios.
How can I find the best commercial mortgage rates?
To find the best commercial mortgage rates, compare offers from various lenders, consider working with a mortgage broker, and stay updated on market trends and lender activity.
