This represented 218 deals over the year, enabled by 87 lenders, with residential business being its biggest driver.
The firm said this indicated the “pulling-back” from lenders and borrowers in favour of other asset classes.
There was a significant uptick in finance for hotel and serviced apartments, rising from 8% of business to 25%. Lending against offices made up 17% of the finance Arc & Co transacted, while purpose-built student accommodation (PBSA) accounted for 9%.
Meanwhile, buy-to-let (BTL) lending was driven by developers becoming accidental landlords and a rise in rental yield growth.
The volume of BTL loans transacted leapt by 471% to £40m, the largest increase compared to other kinds of business.
Aldermore Insights with Jon Cooper: Edition 4 – Budget 2025: Landlords feel the heat, brokers to steer the market
Sponsored by Aldermore
Arc & Co said the jump in the volume of commercial lending pointed to the changing appetite of lenders, as this increased by 110% to £210m.
There was a 60% rise in the volume of bridging loans to £196m, while development finance surged by 273% to £194m.
Finance for marine purposes increased by 163% to £29m.
Residential mortgages were the only business type to see a fall in loan volumes, dropping 52% to £19m.
Refinance deals made up 52% of Arc & Co’s business, similar to 56% the previous year.
Purchase activity accounted for 34% of transactions, compared to 42% previously, while equity release increased year-on-year from 2% to 14%. Arc & Co attributed the rise in equity release finance to higher loan to values (LTVs), allowing for cash to be redeployed into other investments.
Exceptional growth in a more confident market
Andrew Robinson (pictured, left), CEO of Arc & Co, said: “We have experienced exceptional year-on-year growth at Arc & Co, with the total amount of lending arranged more than doubling from £332m to £690m. The number of deals and average deal size increased significantly, reflecting a more confident market.
“Shifting dynamics saw significant changes in commercial and development lending activity.
“Development finance almost tripled over the year, largely driven by operational living sectors – such as PBSA, co-living, and senior living – rather than traditional build-to-sell schemes, which have struggled amid a cooling residential sales market and the introduction of legislation such as the Building Safety Act.”
Edward Horn-Smith (pictured, right), managing director of Arc & Co, added: “Over the past year, one of the most striking trends was the sharp increase in available liquidity; within commercial funding, some banks raised maximum LTVs from around 50% to as high as 75%, driven by stronger balance sheets and the need to deploy surplus deposits.
“We expect banks will continue to ramp up the deployment of capital by offering higher LTVs, relaxing interest coverage ratios (ICRs), and reviewing loan covenants to encourage borrowing. This will result in private funds seeking alternative routes to market.
“Arc & Co’s success has been grounded in strong team execution, technology adoption, and the ability to handle complex, multi-layered transactions. As banks continue to ease lending restrictions – including recently scrapped caps on high-LTV exposures – the market outlook remains promising but demands careful navigation to manage valuation risks, evolving investor sentiment, and macro-level uncertainties.”
