Commercial mortgage applications are rising again, according to new data from Allica Bank, with almost half of brokers reporting increased activity from small and medium-sized enterprises.

The challenger bank’s latest survey of more than 200 brokers found that 48.5% had seen an increase in applications over the past six months, up from 40% in the final quarter of 2024. Just 20.3% reported a fall in volumes, while 31% said activity was broadly unchanged.

The findings suggest growing confidence among business borrowers despite a backdrop of high costs, global uncertainty and higher employer National Insurance contributions. Where applications were down, 45% of brokers cited rising costs as the main barrier, followed by ongoing caution around interest rate movements.

Purchasing their own premises is emerging as a key motivation for many firms, with 45% of brokers reporting more businesses looking to buy. Refinancing and investment purchases also remain consistent drivers of activity.

BRIDGING MOMENTUM

The survey indicates renewed momentum in bridging finance as well. Brokers reported stronger demand across investment (45%), refurbishment (44%) and development (37%) projects, reflecting appetite for short-term solutions. The results come shortly after Allica launched its bridge-to-term product, designed to give borrowers a clearer path into long-term funding.

Charissa Chang, head of broker sales, North and Midlands at Allica Bank, said: “After a tough period, this is a sign that SME confidence is starting to return. Businesses are making decisions again, and we’re seeing more clients looking to secure their premises and invest in their long-term future, which is exactly where the market needs to be heading.

“It’s also a clear sign of resilience. Allica’s recent SME Lending Gap report revealed that the UK has some of the lowest rates of business investment in the G7 – but SMEs are still planning, still borrowing, and still investing, and that says a lot about their mindset, and the role brokers play in helping them move forward.”

She added: “Overall, the findings suggest a more positive outlook than what might be expected, and while challenges remain, the direction of travel is encouraging. Businesses are taking proactive steps, and brokers are at the centre of that momentum, which Allica will continue to support through our ongoing investment in technology and the relationship-led business banking that brokers and their clients still value.”

Brian Love, commercial finance director at Sedulo Funding, echoed the trend: “We’ve definitely noticed a shift over the past few months as clients who were sitting tight are starting to re-engage, and while there’s still a level of caution, there’s also a stronger sense of wanting to plan ahead.

“What makes the difference now is working with lenders who can move at pace, but also take the time to understand each deal individually. Working with banks like Allica, who recognise that, is a breath of fresh air and vital to the success of our clients.”