Tab highlighted it was driven by rising borrower demand, growing lender competition and an expanding product range.
The lender’s latest Mixed-Use Mortgage Monitor estimated that total UK semi-commercial lending reached approximately £242m in the second quarter of 2026, up from £201m in the same period a year earlier.
Specialist lenders are filling the gap left by high street banks
The report also found that transaction volumes rose by 13% year-on-year, increasing from around 415 completions in Q2 2025 to 470 in Q2 2026. Average loan sizes grew by roughly 6% over the same period from £484,000 to £515,000.
Tab’s research showed increased competition within the sector, with the number of active lenders expanding from 25 to 28 over the past 12 months. Product availability has also grown significantly, rising by nearly 20% year-on-year to 94 dedicated semi-commercial and mixed-use mortgage products.
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The tracker found that average loan-to-value (LTV) ratios increased from 64% to 67%.
Tab said liquidity remains strong for well-structured applications, particularly those with 70% LTVs, diversified income streams and experienced borrowers.
Meanwhile, pricing was more competitive despite higher borrowing costs. Average headline fixed rates fell to 6.7% after reaching reached a peak of 6.85%in the first quarter of 2026.
Looking ahead, Tab expects the sector to continue growing throughout the second half of the year, supported by challenger banks broadening their activity across a wider range of loan sizes and specialist lenders developing products that combine bridging and term finance.
Duncan Kreeger (pictured), founder and chief executive of Tab, said the continued evolution of the market had been driven by the retreat of mainstream lenders from complex commercial lending.
He continued: “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.
“Mainstream banks are now focusing on larger relationship-managed customers, with challenger banks, specialist lenders and, to an extent, building societies taking a larger role.”
Kreeger noted that lender numbers had briefly fallen earlier this year following the withdrawal of one specialist lender, but recovered to a record high by the end of Q2 after three new specialist propositions entered the market.
“Specialist lenders are filling the gap left by the long-term retreat of high street lenders from smaller and more complex mixed-use transactions, bringing momentum to lending,” he said.
He added that while refinancing activity remains a contributor to demand, the market is increasingly attracting residential property investors seeking diversification.
“We are seeing more demand for mixed-use finance from investors who have traditionally focused on the residential market alone and want to diversify their portfolios,” Kreeger said.
He concluded: “Semi-commercial lending is one of the most overlooked parts of the specialist finance market. While it sits between residential buy-to-let and larger commercial property lending, until now, there has been very little consistent data tracking developments in the sector. The Mixed-Use Mortgage Monitor will shine a light on this forgotten corner of the specialist market.”
