Tab’s Mixed-Use Mortgage Monitor – ‘The Monitor’– revealed a 3% increase from the previous quarter on semi-commercial mortgage advances.
The lender suggested that, on an annualised basis, the market was now lending at a rate of £1bn per year.
Its research also estimated that semi-commercial mortgage lending has now grown by 36% since Q1 2025, when it stood at £184m.
However, the pace of growth has slowed slightly, as year-on-year growth in lending values slowed from 20% in Q2 to 14% in Q3.
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Increased lender entry
Tab said the Q3 increase was driven by an influx of lenders during the spring months.
The number of active semi-commercial term lenders reached 30 in Q3, up from 25 at the start of 2025.
Two lenders entered during Q3 and none left.
Duncan Kreeger (pictured), CEO of Tab, recognised the consolidation of new lenders, especially those that diversified, saying: “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.”
He remarked that the Q1 collapse of Market Financial Solutions was a blow, which the market is now recovering from.
“Let’s not forget the market has also absorbed a significant exit: MFS entered administration in February 2026, contributing to a dip in lending in Q1,” said Kreeger.
Tab also highlighted that the increase in advances was due to completions being realised from new launches during May and June.
It added that product uptake typically took 8-12 weeks to move from application to completion, thus much of that business came to fruition in July, August and September. Furthermore, refinancing from bridging onto longer-term debt also supported lending.
Shrinking loan size
Average loan sizes shrank by 1% to £510,000. Tab attributed this to newer lenders writing smaller loans.
However, Tab assured that the dip in average loan to values (LTVs) was partly offset by growing appetite for larger loans elsewhere in the market.
Kreeger said semi-commercial mortgage rates have risen despite lower bank rate levels because pricing is being driven more by wholesale funding costs and higher swap rates.
He said: “The bank rate stayed at 3.75% throughout Q3. While that’s 25 basis points lower than it was a year ago, the average semi-commercial rate is 10 basis points higher. The gap between the two has widened from 2.55 percentage points in Q3 2025 to 2.9 percentage points now.
“Rising swap rates pushed specialist pricing up even though bank rate was unchanged. Semi-commercial pricing follows wholesale funding costs more closely than the Bank of England’s headline rate”.
Tab concluded that lending will continue to grow in Q4, but slowly.
“Specialist lenders are likely to reprice upwards to reflect September’s swap rate rise, reversing some of the summer’s cuts,” said Kreeger.
He added: “We also expect at least one more lender to come to market, which could lift the count again in Q4”.
