Swap rates, the Government Growth Guarantee Scheme, HMOs, overseas ownership – Lime Finance’s David Farmer breaks down what’s actually happening in commercial finance right now, and what it means for your next deal
I was asked to speak at Crawley Property Meet recently. The brief was pretty open – just talk about what’s happening in commercial finance. So that’s what I did. No slides crammed with graphs, no corporate waffle. Just an honest conversation about the market as it stands.
I thought it was worth writing up, because the questions I got afterwards were the same ones I hear from clients every week. Good questions. The kind that don’t always get straight answers.
So here’s the written version.
The Bank of England has been cutting the base rate. You’ve probably read that. And yet if you’ve recently looked at a commercial mortgage quote, you might be wondering why it doesn’t feel like anything has got much cheaper.
Here’s why.
Commercial lenders don’t price primarily from the base rate. They price from something called swap rates. A swap rate is essentially what it costs a lender to borrow money in the wholesale market over a fixed period – two years, five years, ten years. When you take a fixed-rate commercial mortgage, the lender is locking in their cost of funds for that term. Swap rates are what they’re locking in against.
The base rate is set by nine people in a committee room in Threadneedle Street. Swap rates are set by financial markets – thousands of traders making bets on where the economy is heading, reacting to inflation data, US Federal Reserve decisions, geopolitical events, budget announcements. It’s a lot noisier.
Right now, swap rates have been moving around quite a bit. The Bank of England held the base rate at 3.75% in June 2026 – the fourth hold in a row – with the MPC voting 7-2 to sit tight, and UK inflation still running at 2.8%, above the 2% target. Meanwhile swap rates have been shifting on events that have nothing to do with Threadneedle Street – a peace deal in the Middle East moved them more in a fortnight than any Bank of England statement.
Commercial mortgage rates are currently ranging from around 5.25% to over 9%, depending on the deal, and the gap between those two numbers is almost entirely explained by how lenders are reading swap rates, not the base rate. All of that feeds into the rates lenders offer. So even when the Bank of England holds or cuts, you might not see commercial mortgage rates follow in any straightforward way.
I find myself explaining this a lot. It’s not that lenders are being awkward. It’s that they’re responding to a different signal than most people think they are.
A lot of people have been asking about the Government Growth Guarantee Scheme. It replaced the Recovery Loan Scheme and extended government-backed lending support into commercial mortgages, not just business loans.
The idea is that the government guarantees part of the lender’s risk, which in theory means lenders are willing to offer finance to businesses they might otherwise consider too risky. For commercial property acquisitions, that can open doors that would otherwise stay shut.
In practice, it’s a useful tool – but it’s not a shortcut. Lenders still assess the deal. They still look at serviceability, the strength of the business, the property itself, and the borrower’s track record. The guarantee reduces some of the lender’s downside; it doesn’t remove their judgement.
Where I’ve seen it work well is for businesses buying their own trading premises – owner-occupied commercial property where the business can clearly service the debt. Where it’s less transformative is on pure investment deals where the fundamentals aren’t there.
Worth knowing about. Worth exploring if you’re buying a commercial property for your own business. But go in with realistic expectations.
This is the section most people leaned forward for.
Complex buy-to-let finance is a very different world from your standard single residential property. HMOs – houses in multiple occupation – are treated differently by lenders because the income profile is different, the licensing requirements are different, and the management intensity is different. Not all lenders will touch them. The ones that do have specific criteria. For context, buy-to-let lending was up 11% in 2025 to £11 billion according to UK Finance — so the market is active, but it’s a market that increasingly rewards investors who get the structure right from the start.
Then layer on top of that: what if the borrower isn’t a UK resident? What if the ownership structure sits inside a trust? What if it’s a company purchase with a non-standard shareholding structure?
Most high street lenders look at all of that and quietly decline. It’s not that the deal is bad. It’s that it doesn’t fit their system.
Specialist lenders approach it differently. They assess each case on its merits – looking at the actual risk rather than whether it ticks every box on a standard application form. I’ve placed deals involving overseas investors, discretionary trust structures, offshore company ownership. These deals get done. They just need someone who knows which lenders to approach and how to present the case, successful commercial finance is about the finer details.
This is where a broker genuinely earns their fee, by the way. Going direct to a lender with a complex structure is a bit like turning up to a job interview without knowing anything about the company. You might get lucky. More likely, you’ll get a no that could have been a yes if the approach had been different.
One increasingly common structure I see is where a buyer purchases the shares of a company – an SPV, or Special Purpose Vehicle – that already owns a buy-to-let property, rather than buying the property itself.
The appeal is usually tax-driven: buying shares can avoid stamp duty land tax on the property, which on higher-value assets adds up quickly. But it comes with its own complications. The buyer is taking on the entire company, including any historic liabilities, so proper due diligence is non-negotiable.
From a lending perspective, financing a share purchase is a different conversation to a standard buy-to-let mortgage – not all lenders will touch it, and those that do will want to understand the SPV’s history, its accounts, and the strength of the underlying asset. It is very much a commercial finance deal, not a regular buy to let deal. It’s a commercial finance structure that can work very well when it’s set up properly. Getting the right advice before you commit – legal, tax, and finance – is essential.
I started Lime because I’d spent nearly two decades on the bank side and watched what happened when institutional priorities shifted. In 2008, previously agreed lending was pulled from clients overnight. Good businesses, good people, good deals – and the bank simply changed its mind. I saw it happen, and I thought: there has to be a better way to serve people.
Being independent matters more than most people realise. We’re not tied to a panel of lenders. We’re not trying to hit a target with a particular bank. We search the whole market for the best commercial finance – high street banks, challenger banks, specialist lenders, private funders – and find the right fit for the deal in front of us.
We work on commercial finance, commercial mortgages, property development finance, business lending, and complex property finance. Our clients range from established property investors to business owners buying their first commercial premises.
The thing I’m most proud of is that clients can be completely honest with us. They don’t have to manage what they say or worry about how something looks. We’re only ever working for them – not for the lender, not for anyone else.
The commercial finance market is active. Lenders are lending. Rates are still higher than people were used to five or six years ago, but there’s genuine competition in the market, and good deals are getting done.
My advice for anyone thinking about a commercial property acquisition or refinance in the next six to twelve months:
Don’t wait for rates to drop to some imagined perfect level. Swap rates move independently of what the Bank of England does, and trying to time the market is as reliable as trying to predict English summer weather. If the deal makes sense at today’s rates, it’s probably worth looking at properly.
Get proper advice early – not after you’ve agreed heads of terms, not after you’ve paid for a survey. The structure of a commercial finance or mortgage deal, how it’s presented to lenders, and which lenders are even worth approaching – all of that needs to be in place before you’re under time pressure.
And if your situation is complicated – overseas connection, trust structure, HMO, mixed-use, or anything else that doesn’t fit a standard form – speak to someone who’s handled that before.
I’m always happy to have a conversation. No obligation, no agenda. Just a straightforward chat about what’s possible.
Commercial finance lenders price from swap rates, not the base rate. Swap rates are set by financial markets and react to inflation data, global events, and economic sentiment — so they move independently of what the Bank of England does. Even when the base rate holds or falls, swap rates can be heading in a different direction.
It’s a government-backed scheme that guarantees part of a lender’s risk, which can make finance available to businesses that might otherwise struggle to qualify. It works particularly well for businesses buying their own trading premises. Lenders still assess the deal thoroughly though — it reduces their risk, it doesn’t remove their judgement.
Yes – but not through most high street lenders. Complex ownership structures (overseas investors, trusts, non-standard company shareholdings) need specialist commercial finance lenders who assess each case on its merits. The deals get done regularly; they just need the right broker who knows which lenders to approach and how to present the case.
If the deal stacks up at today’s rates, it’s worth exploring properly. Trying to time the market around swap rate movements is unpredictable – rates don’t just follow the Bank of England. Waiting for a “perfect” rate that may never arrive can mean missing deals that make solid commercial sense right now.
As early as possible – ideally before you’ve agreed heads of terms or spent money on surveys. Getting the commercial finance deal structure right, identifying the right lenders, and knowing how to present your case all needs to happen before you’re under time pressure.
Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.
Tel: 01293 541333
Email: hello@lime-fs.com
Tel: 0207 866 2102
Email: hello@lime-fs.com
Tel: 01293 541333
Email: hello@lime-fs.com
Tel: 0207 866 2102
Email: hello@lime-fs.com
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