Semi-commercial lending up 20%, new index shows – Mortgage Strategy

Semi-commercial mortgage lending rose by 20% to around £242m in the second quarter of this year, up from £201m in the same period of 2025, new figures from TAB suggest.

In its new monthly index of mixed-use mortgages, the lender estimates market-wide volumes based on its own data and other publicly-available numbers.

It says transaction volumes increased by 13% year on year, from approximately 415 completions in Q2 2025 to 470 in Q2 2026.

TAB says it is seeing mainstream banks step back from smaller and more complex deals, which is creating opportunities for specialists.

At the same time, experienced residential landlords are diversifying into mixed commercial and residential-use properties 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% with 94 dedicated semi-commercial and mixed-use mortgage products currently available.

TAB founder and chief executive Duncan Kreeger says: “I think there’s a good chance the semi-commercial segment could hit the £1bn mark 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. 

“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. 

“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.”

He says a growing number of experienced landlords are becoming disappointed in under-performing residential portfolios and moving into commercial.

Kreeger adds: “Lender competition is increasing, giving brokers and borrowers more choice than they had a year ago.”