Industrial Property Finance Rates in 2026

Ask what the rate is on an industrial mortgage and the honest answer is that there is no single rate to quote. Industrial property finance is priced the way all commercial lending is priced: a reference rate, set by the market, plus a margin the lender adds for the risk in front of it. The reference point in 2026 is the Bank of England base rate at 3.75 percent, held since the December 2025 cut. Everything else is the margin, and the margin is where a good deal is won or lost. We arrange industrial property finance across the UK and see, every week, two borrowers buying near-identical units pay meaningfully different rates, purely because of how the two deals were leveraged, evidenced and packaged.

This piece explains how the rate is actually built, what moves the margin up or down, why fixed and variable behave differently, and how the interest cover test caps what you can borrow. It closes with a worked cost example so the arithmetic is concrete, and answers the question that comes up more than any other: can you borrow the full price with no deposit at all.

How an industrial finance rate is built

Start with the base rate and add a margin. That is the whole model, and understanding it stops you chasing a headline number that does not exist. The base rate at 3.75 percent is common to every lender; the margin is the part they compete on and the part you can influence. A lender looks at how much you are borrowing against the value, how well the income or your accounts cover the payment, how good the building is, and how clean your track record looks. Each of those either adds to or subtracts from the margin. Our guide to how commercial mortgage rates are set breaks the components down in more detail.

The practical consequence is that the rate is a starting point, not a price. Two applicants at the same lender on the same day can be offered rates a full percentage point apart. The one with lower leverage, stronger cover and a better-let building gets the sharper number. That is not the lender being difficult; it is the lender pricing risk, and it is the part of the deal a broker can move.

Indicative rates by product

With that caveat in place, here is where the products sit in 2026. A commercial mortgage on an industrial investment starts from around 6 percent a year. An owner-occupier mortgage for a solid trading business sits in the same region, because a profitable occupier buying its own unit is a strong risk. Development and refurbishment finance is dearer, from around 8 percent a year and usually rolled up so nothing is paid until the works finish and the asset is income-producing. Bridging is quoted per month, typically 0.75 to 1.1 percent, reflecting its role as short-term speed money rather than a resting place. Where a deal needs to stretch beyond senior leverage, mezzanine and equity carries a preferred return often in the 8 to 15 percent range. Once a unit is built, let and stable, most borrowers refinance onto long-term term debt, again from around 6 percent a year on terms of five to twenty-five years, which is the cheapest resting place in the sequence and where a lot of industrial owners want to settle. Every figure here is indicative and asset dependent.

It is worth naming the direction of travel. The base rate has held at 3.75 percent since December 2025 rather than continuing to fall, so the market has stopped pricing in imminent cuts. For a borrower that means the sensible planning assumption is stability rather than a rate that keeps dropping, and it makes the fixed-versus-variable decision below a real one rather than an academic one.

What moves the margin

Four levers do most of the work. Leverage is the first: drop from 70 percent loan to value to 60 percent and the margin usually eases, because the lender has more equity underneath it. Cover is the second: the more comfortably rent or trading profit clears the interest, the finer the price. Asset quality is the third: standard construction, sensible eaves, good access and a location with real occupier demand all read well, while an unusual or specialist unit reads as harder to re-let and prices accordingly. Track record is the fourth: a clean borrower with experience in the sector is cheaper to lend to than a first-timer with a thin file.

None of these is fixed at the point you apply. You can lower leverage by putting in more deposit, improve cover by buying at a sensible price, and strengthen the file by presenting accounts and tenancy evidence properly. As a specialist industrial finance broker, most of the value we add is on exactly these levers before an application ever reaches an underwriter.

Fixed or variable, and the cover test

You will usually choose between a fixed rate, which locks the payment for a set period and buys certainty, and a variable rate that tracks the base rate and moves with it. Fixed suits a borrower who wants to plan cash flow with no surprises; variable suits one who can absorb movement and expects rates to hold or ease. Neither is right in the abstract; it depends on how much payment certainty the business needs.

Whichever you pick, the interest cover test sets the ceiling on how much you can borrow against a let unit. Lenders size an investment loan so that net rent covers the interest with a clear margin, commonly 125 to 200 percent depending on the lender and on whether the rate is fixed or variable. Variable rates usually attract a higher cover requirement because the payment can rise. If the rent will not clear the test at the loan you want, the loan comes down to the level the rent supports, regardless of what the valuation would otherwise allow.

Rate is not the whole cost

Borrowers fixate on the rate and then get surprised by the total. The rate is the largest line, but it is not the only one. Arrangement fees on the standard products are typically 1 to 2 percent of the loan. There is a valuation to pay for, legal costs on both sides, and, on bridging and development, the interest is often rolled up so it compounds into the balance rather than being paid monthly. A facility with a slightly higher rate and a lower fee can cost less over a short hold than a keener rate with a heavy fee. Comparing headline rates alone is how borrowers talk themselves into the more expensive deal.

A worked example

Take a hypothetical let unit bought for £600,000. At 65 percent loan to value the mortgage is £390,000 and the deposit is £210,000. At an indicative 6.5 percent a year on an interest-only basis, the annual interest is £25,350. Suppose the unit is let at £45,000 a year: net rent covers the interest 1.77 times, or 177 percent, which sits comfortably inside the 125 to 200 percent band a lender wants to see. Add an arrangement fee at 1.5 percent of the loan, and that is £5,850, plus valuation and legal costs on top. Note that this is an interest-only illustration: on a capital-and-repayment structure the monthly payment is higher, because you are clearing principal as well as interest, and the cover test has to accommodate that larger repayment.

Now change one input. If the valuer returns £560,000 rather than the £600,000 price, a 65 percent facility lends against the lower figure, so the loan falls to £364,000 and your deposit rises to £236,000. The rate has not moved, but the cash you need has. This is the arithmetic that decides whether a deal completes, and it is why we model the numbers before an offer is agreed, not after. You can run your own version with our commercial mortgage calculator. All figures here are hypothetical and for illustration only.

Common questions

Can I get a 100 percent commercial mortgage? No. Senior industrial lending tops out around 70 to 80 percent of value on the best owner-occupier cases and lower on investment, so a deposit is always required. Where a borrower needs to go further, mezzanine finance sitting behind the senior loan can top the funding up to around 85 to 90 percent of cost, but it carries a higher return and does not remove the need for equity in the deal. A genuine no-deposit commercial mortgage does not exist in the mainstream market.

Is a 6 percent rate high or low? In the current environment, with the base rate at 3.75 percent, a rate from around 6 percent on a well-covered industrial mortgage is a normal, competitive number rather than a high one. What matters is the margin over base and the fees alongside it, not the headline figure on its own.

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Industrial Property Finance is operated by Lenzie Consulting Ltd, registered in England and Wales, company number 08174104. We are a finance arranger and introducer, not a lender, and we do not provide financial, legal or tax advice. Industrial property finance for limited companies, investors and business borrowers is unregulated commercial lending that falls outside the Financial Conduct Authority’s regulated-mortgage perimeter. Where a case would be a regulated mortgage contract, we refer it to an appropriately authorised firm. All rates, fees and worked figures here are indicative, hypothetical and correct as at July 2026.