Commercial Mortgage Rates UK 2026 | Current Rates & Comparison

Commercial mortgage rates in the UK vary significantly depending on the lender, property type, loan-to-value ratio, and borrower profile. As an ex-banker who has structured hundreds of commercial mortgage deals, I can tell you that the rate you are quoted is rarely the rate you end up paying once you understand the full picture. This guide breaks down current commercial mortgage rates across the UK market and shows you how to secure the most competitive terms for your deal.

Current UK Commercial Mortgage Rates Overview

As of early 2026, the Bank of England base rate sits at 4.50%, having come down from its peak of 5.25% in late 2023. This base rate forms the foundation for most commercial mortgage pricing, though some lenders price off SONIA (Sterling Overnight Index Average) instead.

Current indicative commercial mortgage rates across the UK market:

• High street banks: 5.75% to 7.50% (typically base rate + 1.25% to 3.00%)
• Challenger banks: 6.50% to 8.50% (typically base rate + 2.00% to 4.00%)
• Specialist lenders: 7.50% to 10.00% (typically base rate + 3.00% to 5.50%)
• Private banks: 5.50% to 7.00% for high-net-worth clients

These ranges are indicative. Your actual rate depends on the specific combination of factors that make up your deal, which I will cover in detail below.

Commercial Mortgage Rates by Lender Type

Understanding which type of lender suits your deal is the first step to getting the best rate. Each category serves a different part of the market.

High Street Banks

Lenders like **Lloyds Banking Group**, **NatWest**, **Barclays**, and **HSBC** offer the most competitive rates in the market, but their criteria are the most restrictive. They typically require:

• Minimum loan size of £250,000 to £500,000
• Maximum LTV of 60-70%
• Strong borrower covenant with proven track record
• Mainstream property types in good locations
• Clean credit history for all directors and guarantors

If you tick all the boxes, high street bank rates currently start from around **5.75% to 6.50%** for the strongest applications. However, these banks are slow to process applications, often taking 8 to 16 weeks, and can be inflexible when deals have any complexity.

Challenger Banks

The challenger bank market has transformed commercial lending over the past decade. Lenders such as **Aldermore**, **Shawbrook**, **Allica Bank**, **Hampshire Trust**, and **Cambridge & Counties** have carved out significant market share by offering more flexibility than high street banks while maintaining competitive pricing.

Challenger bank rates typically range from **6.50% to 8.50%**, with the premium over high street banks reflecting their greater willingness to consider:

• Higher LTV ratios (up to 75%)
• Less conventional property types
• Borrowers with lighter track records
• More complex ownership structures
• Faster turnaround times (typically 4 to 8 weeks)

For many borrowers, the slightly higher rate from a challenger bank is more than offset by the certainty and speed of execution.

Specialist Lenders

For non-standard deals, specialist lenders such as **Investec**, **Paragon**, **Together**, **UTB**, and **Octopus Real Estate** fill the gap that mainstream lenders leave. Rates range from **7.50% to 10.00%** or more, reflecting the additional risk they take on.

Specialist lenders are appropriate when:

• The property is unusual or non-standard construction
• LTV requirements exceed 75%
• Borrowers have adverse credit or limited trading history
• The deal needs to complete very quickly
• Income streams are complex or non-traditional

Private Banks

For high-net-worth individuals and family offices, private banks like **Coutts**, **Arbuthnot Latham**, and **Hampden & Co** can offer bespoke terms. Rates from **5.50% to 7.00%** are achievable, but these lenders typically require a broader banking relationship and minimum investable assets, often starting at £1 million or more.

Rates by Property Type

Lenders price commercial mortgages partly based on the perceived risk of the underlying property sector. Here is how rates typically compare across property types:

Office Property

Office mortgages attract rates from **5.75% to 8.00%** depending on quality, location, and tenant strength. Prime city centre offices with strong covenants on long leases command the best rates. Secondary offices in weaker locations or with short leases will be priced higher. The post-pandemic shift to hybrid working has made some lenders more cautious about office lending, though well-located, modern offices remain popular.

Retail Property

Retail rates range from **6.00% to 9.00%**, with a wide spread reflecting the divergence in the sector. Convenience retail with strong covenants (supermarkets, pharmacies, essential services) commands pricing close to office rates. High street retail in secondary locations attracts a premium, and some lenders have restricted or withdrawn from certain retail sub-sectors entirely.

Industrial and Warehouse

Industrial has been the standout commercial property sector for several years, benefiting from e-commerce growth and logistics demand. Rates from **5.75% to 7.50%** reflect lenders' strong appetite for this sector. Modern logistics units and well-maintained industrial estates in established locations attract the most competitive pricing.

Semi-Commercial / Mixed-Use

Properties combining commercial and residential use, such as shops with flats above, attract rates from **6.00% to 8.50%**. The rate depends heavily on the split between commercial and residential elements and which lending regime the property falls under. Read our [semi-commercial mortgage guide](/knowledge-hub/semi-commercial-mortgage-guide) for more detail.

Pubs, Hotels and Leisure

Trading businesses attract the highest rates in the commercial mortgage market, typically **7.00% to 10.00%** or more. The operational complexity and income volatility of these businesses means fewer lenders participate, and those that do charge a premium. Strong trading history and experienced operators can achieve rates towards the lower end of this range.

Healthcare Properties

Care homes, GP surgeries, and pharmacies typically see rates of **6.50% to 8.50%**. CQC-regulated properties require specialist underwriting, but the essential nature of healthcare services means lender appetite remains reasonable for well-run operations.

Fixed vs Variable vs Tracker Rates

Choosing the right rate structure is as important as the rate itself. Each option has distinct advantages and risks.

Fixed Rate Commercial Mortgages

A fixed rate locks in your interest rate for an agreed period, typically 2, 3, 5, or occasionally 10 years. Current fixed rates for commercial mortgages range from approximately **5.75% to 9.00%** depending on the fix period and lender.

**Advantages of fixed rates:**

• Payment certainty for budgeting and cash flow
• Protection against rising interest rates
• Often preferred by investors with tight DSCR margins

**Disadvantages:**

• Typically higher initial rate than variable
• Early repayment charges apply during the fixed period
• Less flexibility to restructure or repay early

Fixed rates are popular with investors who want certainty and owner-occupiers who need predictable overheads. In the current environment, with the base rate expected to fall gradually, some borrowers prefer shorter fixes to avoid being locked in above market rates.

Variable Rate Commercial Mortgages

Variable rates move with the lender's standard variable rate (SVR) or a reference rate. Current variable commercial mortgage rates range from **6.00% to 10.00%**.

**Advantages:**

• Often lower initial rate than fixed
• Greater flexibility — typically no or lower early repayment charges
• Benefit immediately from rate reductions

**Disadvantages:**

• Payments increase if rates rise
• Harder to budget with certainty
• Some lenders can increase their SVR independently of the base rate

Tracker Rate Commercial Mortgages

Tracker mortgages are linked directly to the Bank of England base rate or SONIA, with a fixed margin added. For example, base rate + 2.50% would currently give a rate of 7.00%. Current tracker rates range from **base rate + 1.25% to base rate + 5.50%**.

**Advantages:**

• Transparent pricing — you always know the margin
• Direct benefit from base rate reductions
• Often more competitive than SVR-linked products

**Disadvantages:**

• Payments increase when the base rate rises
• Less certainty than fixed rates
• Some trackers have collars (minimum rates) that limit downside benefit

Factors That Affect Your Commercial Mortgage Rate

Understanding what drives your rate empowers you to present the strongest possible application. Here are the key factors lenders consider when pricing your deal.

Loan-to-Value Ratio

LTV is the single biggest driver of rate. The relationship is straightforward: lower LTV equals lower rate. A deal at 50% LTV might be priced 1.00% to 1.50% lower than the same deal at 75% LTV. If you can put in more equity, the rate saving over the life of the mortgage can be substantial.

Debt Service Coverage Ratio

Lenders want comfortable income coverage. A property generating 2.00x DSCR gives the lender far more confidence than one at 1.25x. Stronger income coverage typically results in better pricing and more lender competition for your deal.

Property Type and Quality

As outlined above, mainstream property types in good locations attract better rates. Properties with strong tenants on long leases, modern specifications, and good environmental credentials are increasingly rewarded with competitive pricing.

Borrower Profile

Your experience, net worth, credit history, and track record all influence pricing. A seasoned property investor with a strong balance sheet will be offered meaningfully better rates than a first-time buyer with limited assets.

Loan Size

Many lenders have sweet spots for loan size. High street banks typically prefer £500,000-plus, while some specialists focus on sub-£250,000 or £1 million-plus. Being in a lender's preferred range can improve your rate.

Lease Length and Tenant Quality

For investment properties, the unexpired lease term and tenant covenant strength directly affect pricing. Properties with 10-plus years remaining to strong tenants achieve the best rates. Short leases or weak tenants increase perceived risk and therefore rate.

How to Secure the Best Commercial Mortgage Rate

Having spent years on both sides of the commercial lending desk, here are the practical steps I recommend to secure the most competitive rate.

1. Prepare Your Application Thoroughly

A well-prepared application with complete documentation signals professionalism and reduces the lender's perceived risk. Ensure you have up-to-date accounts, clear evidence of income, and a comprehensive property schedule before approaching any lender.

2. Maximise Your Deposit

Every percentage point of additional equity improves your rate. If you can move from 70% to 60% LTV, the rate improvement typically pays for the additional capital deployed many times over.

3. Strengthen Your Income Coverage

If rental income can be improved before refinancing, or if you can demonstrate additional income sources, stronger DSCR will translate directly into better pricing.

4. Use a Specialist Broker

This is perhaps the most impactful step. A specialist commercial mortgage broker has relationships with dozens of lenders and understands exactly which lender will offer the best terms for your specific deal. The rate difference between the right and wrong lender for your circumstances can easily be 1.00% to 2.00% or more.

At Commercial Mortgages Broker, we access the whole market and negotiate the best available terms for every client. Our ex-banking background means we understand how lenders price risk and how to present your deal to achieve the most competitive outcome.

5. Consider the Total Cost, Not Just the Rate

A headline rate of 6.00% with a 2% arrangement fee may work out more expensive over the term than a 6.50% rate with a 1% fee. Always calculate the total cost of borrowing, including arrangement fees, valuation costs, legal fees, and any early repayment charges.

6. Time Your Application Strategically

Lender appetite fluctuates throughout the year. Quarter-end periods often see banks keen to deploy capital, potentially resulting in more competitive terms. Conversely, approaching a lender when they are at capacity in your sector may result in a less competitive offer or outright decline.

Commercial Mortgage Rate Trends

The commercial mortgage market has seen significant rate movement over recent years:

• 2021-2022: Historically low rates with base rate at 0.10% to 0.75%. Commercial mortgage rates as low as 2.50% to 4.00% were widely available.
• 2023: Sharp rate increases as the base rate rose rapidly to 5.25%. Commercial rates climbed to 6.00% to 10.00% across the market.
• 2024: Rates stabilised as the base rate peaked and began its gradual descent. The market adjusted to the new pricing environment.
• 2025-2026: Gradual easing as the base rate reduced to 4.50%. Commercial rates have come down modestly, but remain significantly above 2021 levels. Further base rate reductions are anticipated, which should continue to improve commercial mortgage pricing.

The key takeaway is that while rates are higher than the exceptional lows of 2021-2022, they remain historically reasonable. The commercial property market is adjusting well to the current rate environment, and lending appetite across all lender types is strong.

When to Lock In a Rate

Timing your rate fix is part science, part judgement. If the market consensus is that rates will fall further, a shorter fix or tracker might be preferable. If you value certainty above all else, locking in a longer fix at current levels provides peace of mind.

Most borrowers in the current market are opting for 2 to 3 year fixed rates or tracker products, positioning themselves to benefit from anticipated further base rate reductions while maintaining reasonable certainty in the short term.

For a personalised assessment of which rate structure suits your circumstances, [contact our team](/contact) for a no-obligation discussion.

Comparing Commercial Mortgage Rates: A Practical Example

To illustrate how rates translate into real costs, consider a £500,000 commercial mortgage on a 20-year term:

The difference between a 6.00% and 8.00% rate on a £500,000 loan is £600 per month on a repayment basis, or £833 per month interest-only. Over a 5-year term, that amounts to £50,000 in additional interest. This demonstrates why securing the best possible rate is worth the effort.

Use our [commercial mortgage calculator](/calculators/commercial-mortgage) to run the numbers for your specific deal.

Frequently Asked Questions

Below we answer the most common questions about commercial mortgage rates in the UK.

*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*