According to a survey of over 200 brokers conducted by Allica Bank, the rise in commercial mortgage applications has been seen over the last six months and is up from the 40% of brokers who saw more applications in Q4 last year. Allica Bank said this took place amid global uncertainty, trade tensions, high costs, and the introduction of higher employer National Insurance contributions (NICs).
Just over a fifth of brokers said there was a drop in applications, while 31% said the volume of business was fairly stable.
For those who said application volumes had fallen, the reasons behind this were consistent with the Q4 data, with 45% of brokers citing rising costs as the main barrier to borrowing. This was followed by uncertainty around rate movements.
Some 43% of respondents said the reasons for borrowing stayed consistent, naming refinancing and investment purchases as the main purposes.
Around 45% of brokers said there were more businesses looking to purchase their own premises, which Allica Bank said indicated a need for long-term stability among firms.
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Within bridging finance, brokers noted a demand for growth, with 45% saying there was a rise in investments, 44% reporting more refurbishment and 37% citing an increase in development projects.
Brian Love, commercial finance director at Sedulo Funding, said: “We’ve definitely noticed a shift over the past few months as clients who were sitting tight are starting to re-engage, and while there’s still a level of caution, there’s also a stronger sense of wanting to plan ahead.
“What makes the difference now is working with lenders who can move at pace, but also take the time to understand each deal individually. Working with banks like Allica, who recognise that, is a breath of fresh air and vital to the success of our clients.”
This data comes after Allica Bank launched a bridge-to-term product to give borrowers a certain route to long-term funding.
Confidence is starting to return
Charissa Chang, head of broker sales for the North and Midlands at Allica Bank, said: “After a tough period, this is a sign that SME confidence is starting to return. Businesses are making decisions again, and we’re seeing more clients looking to secure their premises and invest in their long-term future, which is exactly where the market needs to be heading.”
She added: “It’s also a clear sign of resilience. Allica’s recent SME Lending Gap report revealed that the UK has some of the lowest rates of business investment in the G7 – but SMEs are still planning, still borrowing, and still investing, and that says a lot about their mindset, and the role brokers play in helping them move forward.”
“Overall, the findings suggest a more positive outlook than what might be expected, and while challenges remain, the direction of travel is encouraging. Businesses are taking proactive steps, and brokers are at the centre of that momentum, which Allica will continue to support through our ongoing investment in technology and the relationship-led business banking that brokers and their clients still value.”
To mark five years in the broker market, Allica Bank recently agreed to fund 50 specialist finance qualifications for brokers.
