20 years of growth, complexity and diversification in specialist commercial lending – Callaghan

I’ve spent most of the last 11 years at OSB Group, having moved into commercial lending after working at Santander in the residential lending market. Even over that time frame, the market has changed significantly.

When I joined in 2015, it was already evolving, but compared to today, it was smaller, less diverse and more limited in the solutions available to investors.

At the time, there were fewer lenders operating in the space, fewer commercial investors and less choice overall. Many lending scenarios that would now be viewed as routine were still regarded as specialist. Commercial property itself was often seen as a more niche area of investment.

Today, it’s a much broader and more sophisticated market. Investors have become more ambitious in how they build and manage portfolios, while lenders have expanded their propositions to support a much wider range of requirements.

Diversification has been one of the defining themes of that change. We’ve seen many investors who traditionally focused on buy to let (BTL) move into commercial and semi-commercial assets, while others are building portfolios across multiple asset classes rather than concentrating on a single sector.

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The appetite to invest is still there. What has changed is what investors expect from their lenders.

Borrowers increasingly want lenders who understand complex ownership structures, can support different asset types, and provide the flexibility needed as portfolios evolve. The ability to lend across commercial premises, semi-commercial property and mixed portfolios is becoming an expectation rather than a differentiator.

When I entered the market, processes were more manual and turnaround times looked very different. Technology has transformed the lending journey, improving transparency and helping lenders deliver quicker outcomes.

That has undoubtedly improved the customer experience, but it has also raised expectations. Brokers and borrowers want quicker decisions, greater visibility and a smoother journey from application to completion.

A changing space

At the same time, transactions themselves have become more complex. Investors are using increasingly sophisticated structures and managing more diverse portfolios, which means specialist expertise is as important as ever.

That’s why specialist lenders continue to have a vital role to play.

Commercial lending often requires lenders to look beyond the application itself and understand the bigger picture.

Like every sector, commercial lending has also faced its share of challenges. For me, the most difficult period was Covid-19. While the financial crisis and more recent interest rate rises created challenges of their own, the level of uncertainty during the pandemic was unlike anything many of us had experienced before. Entire sectors, particularly hospitality, were hit hard and nobody knew how quickly markets would recover.

What stood out during that period was how quickly the sector adapted, and how important collaboration between lenders, brokers and clients became. Those relationships helped businesses navigate a highly uncertain environment and remain just as important today.

In fact, despite all the technological advances we’ve seen, commercial lending remains a relationship-driven business.

Looking to the future

Systems and processes have improved dramatically, but successful outcomes still depend on trust, communication and an understanding of individual circumstances. That’s particularly true when transactions become more complicated or unexpected challenges arise.

Looking forward, technology will continue to shape the market. Artificial intelligence (AI) has the potential to improve efficiency, reduce administration and speed up parts of the lending process.

Across the sector, lenders are continuing to invest in technology to meet rising expectations around speed and transparency. At InterBay, we’re no different. Plans to modernise our platform next year reflect the wider direction of travel across the industry, where better technology is helping to simplify processes and improve the broker experience.

What I don’t expect to change is the need for human expertise. Commercial property transactions are rarely straightforward. They often involve unique circumstances, complex structures and decisions that require experience and judgement. Technology can support those decisions, but it won’t replace the value of specialist knowledge and strong relationships.

If the last 20 years have shown anything, it’s that the market never stands still. Investor needs change, technology moves on and lending continues to evolve.

But some things don’t change. Investors still value flexibility. Brokers still want expertise, consistency and service. And successful lending still comes down to relationships, trust and understanding.

That’s every bit as true today as it was 20 years ago.