Allica Bank Extends Commercial Mortgage Fee Waiver Until End of 2026

Allica Bank is extending its commercial mortgage arrangement fee waiver until the end of 2026, a move that provides significant cost relief for established SMEs and brokers navigating a volatile interest rate environment. For fintech professionals, it signals a strategic shift toward long-term fee-free incentives to maintain lending volumes as swap rates drive up base pricing.

What was announced

Allica Bank originally launched this fee waiver in the summer, with an expiration date of 30 September. However, the bank has now extended the offer until 31 December 2026. The waiver applies to several specific mortgage types: owner-occupied mortgages from £750,000 (waiving a 1.5% fee), commercial investment mortgages from £750,000 (waiving a 2% fee), and specialist buy-to-let mortgages from £1.5 million (also waiving a 2% fee). This applies to all eligible new applications submitted before the end of 2026.

Simultaneously, Allica is adjusting its fixed-rate commercial mortgage pricing. Effective 24 September, the bank is increasing its rates by 0.45% across all fixed-rate commercial mortgages. This adjustment is a direct response to fluctuations in swap rates and broader market pricing. The bank aims to balance these rate hikes by removing the upfront arrangement fees, which can represent a substantial capital outlay for businesses looking to invest or refinance. The extension is specifically designed to support brokers and established businesses with 5 to 250 employees as they face mounting pressure on mortgage pricing.

"Movements in swap rates mean we need to make a change to our fixed-rate commercial mortgage and specialist buy-to-let pricing. We know brokers are seeing the same pressures across the market, so we also want to be practical about where we can continue to support them and their clients."

Nick Baker, Chief Commercial Officer at Allica Bank.

The companies involved

Allica Bank is a UK-based challenger bank specifically positioned to serve established small and medium-sized enterprises (SMEs). Unlike many fintechs that focus on micro-businesses or startups, Allica targets firms with between 5 and 250 employees—a segment that accounts for roughly one-third of UK employment and turnover. These businesses often find themselves in a "banking gap," where they have outgrown retail business banking but are not large enough to receive bespoke service from major high-street institutions.

Allica is authorised and regulated by the Prudential Regulation Authority and the Financial Conduct Authority. The bank’s model combines modern technology with traditional relationship management, providing clients with dedicated managers and digital tools intended to streamline complex commercial lending. Since its launch, Allica has focused on capturing market share from legacy banks by offering more competitive pricing and faster decision-making processes. The bank has established itself as a significant player in the commercial mortgage and specialist buy-to-let sectors, leveraging its status as a fully licensed bank to provide diverse funding solutions to the UK's "missing middle" of established businesses.

What FF News has reported before

FF News has followed Allica Bank’s growth closely, with 84 stories covering its evolution. Recently, the bank made a significant move to bolster its SME offerings by completing the Allica Bank Acquires Fintech Kriya in a Move to Deliver £1 Billion of SME Working Capital Finance by 2028. This acquisition highlights the bank's focus on working capital alongside its mortgage products. Additionally, Allica has been active in refining its lending criteria, as seen when Allica Bank Enhances Its Bridging Proposition for Semi-commercial Properties. Beyond its own product launches, Allica is often part of broader industry discussions regarding the UK's competitive landscape, such as when Innovate Finance Urges UK Action on Open Finance and AI to Secure FinTech Lead.

What this means

This move highlights the intensifying competition in the commercial lending space as challenger banks attempt to lure established businesses away from traditional "Big Four" lenders. By waiving arrangement fees for over two years, Allica is effectively absorbing a portion of the borrower's entry cost to offset the pain of rising interest rates. This strategy puts pressure on other specialist lenders to reconsider their fee structures or risk losing broker loyalty. The decision to link the waiver to a rate hike suggests a pivot toward transparency in the total cost of credit. However, the industry remains sensitive to swap rate volatility, and it remains to be seen if fee waivers alone can sustain loan demand if base rates continue to fluctuate.