Semi-commercial mortgage lending rose 14% year on year to £250m in the third quarter, as new lenders entered the market and refinancing from bridging loans supported activity, the latest figures from TAB have revealed.

The commercial mortgage lender’s updated Mixed-Use Mortgage Monitor showed lending increased 3% from the previous quarter and has grown 36% since the first quarter of 2025, when quarterly advances stood at £184m. Lending is now running at an annualised rate of £1bn, although total advances over the past four quarters reached around £936m.

The number of active semi-commercial term lenders increased to 30 in Q3, up from 25 at the start of 2025, while the number of available products rose 5% quarter on quarter to 99.

Two lenders entered the market during the quarter, extending a trend of specialist bridging providers moving into longer-term lending to retain borrowers when their loans are refinanced.

TAB CEO Duncan Kreeger said: "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."

Average loan sizes fell 1% to £510,000, while average loan-to-value ratios declined from 67% to 66.5%, reflecting tighter lending criteria and greater availability of competitive pricing at lower LTVs. The average headline fixed rate eased from 6.70% to 6.65%, despite new entrants offering rates of up to 7.99%.

However, rising swap rates in September are expected to push specialist mortgage pricing higher in the final quarter. The Bank of England’s base rate remained at 3.75% throughout Q3, 25 basis points below its level a year earlier, while the average semi-commercial mortgage rate was 10 basis points higher year on year.

Kreeger said: "Semi-commercial pricing follows wholesale funding costs more closely than the Bank of England's headline rate, and borrowers waiting for base rate cuts to reach their mortgage may wait longer than they expect."

TAB expects lending to continue growing in Q4, although at a slower pace as higher funding costs feed through to mortgage rates. The two lenders that entered in September are expected to contribute more completions in the final quarter and early 2027, while TAB said its new £200m funding facility, secured from a challenger bank in September, would support further lending.

---