New UK commercial real estate (CRE) lending reached £28.7bn in the six months to the end of June, up 29% on the first half of 2025, according to Bayes Business School.
The total annual volume of new lending could potentially be higher than in 2025, reaching another peak in the cycle, the business school said in its bi-annual commercial property lending report, which analyses £201bn of debt tied to commercial real estate, with an additional £34bn of social housing debt held by 11 lenders.
“This has been the strongest half year post pandemic,” said Dr Nicole Lux, senior research fellow at Bayes and author of the report. “If we have another £28bn for the second half, we will reach a peak post GFC [global financial crisis].
“With expectations that interest rates will rise to year-end 2026, we could see another record year of new lending and refinancing volumes.”
She added: “The striking feature of this market isn’t a shortage of money. It’s where that money is going. Lenders are competing hard to refinance existing loans even as borrowers prepare for the possibility of higher interest rates. From January, around £33bn of loans were expected to mature during 2026 – fuelling the refinancing pipeline.”
The report revealed that limited transaction volumes, over‑concentration in residential and logistics sectors, and higher risk from alternative assets has created risk profiles of uneven vulnerability across lender groups.
It added that these risks have created competitive pressure among lenders, leading to compressed margins and possibly weaker covenant discipline.
Aparna Sehgal, a partner at law firm Winston & Strawn London, said: “What stands out in this data set is the disconnect between sentiment and deployment. Despite geopolitical uncertainty and expectations of higher rates, lenders continued to put capital to work.”
John Hardie, senior director debt and structured finance at CBRE, added: “Lenders are becoming more discerning. Headline margins are tightening, but the averages mask big differences between lenders. On secondary offices, more than 100bps now separates the keenest and most expensive lender groups at similar leverage.
“With six lenders writing more than half of all new loans, the best terms rarely come from the first call. The borrowers capturing this liquidity are the ones running a broad, competitive process across banks, insurers and debt funds.”
