THE PROPERTY FILTER TAKE
Allica Bank raised rates on all its fixed-rate commercial mortgages by 0.45% from 24 September, and extended its arrangement fee waiver to new applications submitted until 31 December 2026.
The numbers are pointing to a split: on a £750,000 commercial investment loan the waived 2% fee is worth £15,000, but below £750,000 there is no waiver, and on a fixed-rate commercial mortgage the 0.45% rise applies in full.
Consider asking your broker to compare the full cost over the fixed term, fee and interest together, before you choose between a waived-fee deal and a cheaper rate elsewhere.
Commercial mortgage rates at Allica Bank rose by 0.45% across all its fixed-rate commercial mortgages from 24 September, according to Bridging & Commercial's report of the announcement. In the same announcement, the lender extended its arrangement fee waiver (the upfront fee a lender charges to set up a loan) from 30 September to 31 December 2026. Allica blamed movements in swap rates (the wholesale rates lenders pay to fund fixed deals) for the rise.
What exactly did Allica change?
The rate rise covers every fixed-rate commercial mortgage in the range. Nick Baker, Allica's chief commercial officer, said the swap moves meant a change to "our fixed rate commercial mortgage and specialist buy-to-let pricing" (Mortgage Solutions, 24 September 2026). None of the coverage I read gives the size of the specialist BTL (buy-to-let) change, so I cannot say whether the 0.45% also applies to specialist BTL.
The waiver is narrower. It removes a 1.5% fee on owner-occupied mortgages (where the business trades from the property) of £750,000 or more. It removes a 2% fee on commercial investment mortgages (let to a tenant) of £750,000 or more, and on specialist BTL mortgages of £1.5m or more. It covers eligible new applications submitted until the end of 2026, according to The Intermediary.
The offer first ran for applications submitted between 7 July and 30 September 2026 (Bridging & Commercial). Its thresholds have not changed in the extension. As of 6 October, 24 September is the latest Allica pricing change I can verify.
Does the fee waiver outweigh a 0.45% rate rise?
It depends on loan size and how long you hold the deal. On a £750,000 commercial investment loan, the waived 2% fee is worth £15,000. On interest-only terms (you pay only the interest each month), a 0.45% rise adds £3,375 a year, or £281.25 a month. These are my own calculations, before any other fees.
So the waiver covers just under four and a half years of the higher rate. Hold the loan for five years and the extra interest overtakes the saved fee during the fifth year. You can test how a higher rate affects rental cover with our free stress test calculator.
But smaller deals sit below the line. A mixed-use or semi-commercial purchase (a shop with a flat above, for example) under £750,000 gets no waiver. Where it is written as a fixed-rate commercial mortgage, the rate rise still applies. The data on that segment is worth knowing. Tab's Mixed-Use Mortgage Monitor put the average semi-commercial loan at £515,000 in Q2 2026 (Mortgage Solutions, 29 July 2026). That average is well below the £750,000 threshold. Our negotiation and finance hub covers how investors work with brokers on specialist lending.
Why are commercial mortgage rates rising now?
The trend has turned. Tab's monitor showed average semi-commercial headline fixed rates falling to 6.7% in Q2 2026, from a Q1 peak of 6.85% (Mortgage Solutions, 29 July 2026). Allica itself cut its specialist BTL rates by 0.25% earlier this year (The Intermediary).
Funding costs then moved the other way. Chatham Financial data showed the two-year swap at 4.26% on 3 September, up from 4.06% a month earlier. The five-year swap rose from 4.16% to 4.36% over the same month (Mortgage Solutions, reporting Moneyfacts, 7 September 2026). In late February, the two-year swap had been around 3.33%.
Government borrowing costs tell the same story. Mortgage Solutions published a round-up on 1 October. It quoted Bestinvest's Jason Hollands putting 30-year gilt yields (the return on government bonds) near 6% and 10-year yields at 5.5% (Mortgage Solutions, 1 October 2026). Those are dated readings, not live ones. If you are weighing commercial property against residential, our property investment strategies hub sets out how investors compare the two.
Key takeaways
Allica Bank raised rates on all its fixed-rate commercial mortgages by 0.45% from 24 September 2026, citing movements in swap rates.
Allica's arrangement fee waiver now covers eligible new applications submitted until 31 December 2026, instead of 30 September.
The waiver only applies to owner-occupied and commercial investment loans of £750,000 or more, and specialist BTL loans of £1.5m or more.
On a £750,000 interest-only commercial investment loan, the waived 2% fee is worth £15,000, while a 0.45% rise adds £3,375 a year.
The two-year swap rate stood at 4.26% on 3 September, up from around 3.33% in late February, according to Chatham Financial data cited by Moneyfacts.
Frequently asked questions
How much did Allica raise its commercial mortgage rates by?
Which Allica arrangement fees are waived?
When does the Allica fee waiver end?
Does the fee waiver apply to smaller commercial loans?
