Mid-2026 Commercial Lending Market Update: Opportunities Amid Steady Rates and Sectoral Shifts

As we move into the second half of 2026, Australia's commercial lending landscape remains resilient despite persistent macroeconomic headwinds. With the RBA's cash rate holding steady at 4.35%, borrowers and businesses are navigating a "higher for longer" environment that rewards careful structuring and independent advice. At Glenclair Financial, we're seeing increased activity in business lending, property development finance, and asset/equipment facilities as clients seek competitive terms through tenders.

Interest Rates: Stability with Caution

The Reserve Bank of Australia maintained the cash rate at 4.35% in its June meeting, with economists largely forecasting no cuts until at least early-to-mid 2027. While inflation has moderated, it remains above target, and Governor Bullock has kept the door open for further hikes if needed. This stability provides some predictability for debt servicing but continues to pressure serviceability, particularly for development and acquisition deals.

For commercial borrowers, this environment highlights the value of fixed-rate options where available and strong cashflow management. Non-bank lenders and private credit providers are filling gaps with more flexible structures, often at competitive rates for well-presented propositions.

Business Lending Growth Accelerates

Recent APRA data shows robust expansion in lending to non-financial businesses, up $7.8 billion (0.6%) in May to around $1.24 trillion. The major banks, particularly CBA and Westpac, drove much of this momentum, with Westpac posting the strongest percentage growth (+1.2%). Over the past year, business lending across ADIs has grown nearly 10%.

This uptick reflects rising demand for working capital, acquisitions, and refinancing. Brokers and clients report stronger appetite for commercial mortgages and business loans, consistent with earlier 2026 sentiment surveys. At Glenclair, we've helped clients secure favourable outcomes in equipment finance and acquisition facilities through competitive tenders, often achieving meaningful rate reductions.

Property Development and Construction: Feasibility Challenges Persist

Elevated construction costs remain the top concern for lenders and developers heading into the latter half of 2026. While housing undersupply drives long-term demand, short-term feasibility is constrained by high input costs, planning hurdles, and tighter credit criteria for land acquisition, development, and construction (ADC) loans.

Positive signals include growing interest in acquisition finance and some recovery in investment volumes. Private credit continues to play a larger role in the capital stack, offering speed and flexibility where bank appetite is more measured. For our clients at Glenclair involved in townhouse developments or larger projects, early engagement with specialist funders like La Trobe Financial and robust feasibility modelling are proving essential.

The Data Centre Boom: Inflation Risks and New Opportunities

One of the standout themes this year is the surge in AI-driven data centre investment, now rivaling past mining booms in scale, particularly in NSW and Victoria. While this injects significant capital and supports business investment, it brings risks: upward pressure on power prices (potentially +26% for households/businesses), competition for industrial land, and broader inflationary effects that could influence RBA policy.

For commercial finance professionals, this creates niches in power infrastructure, associated construction, and specialist equipment financing. Lenders are adapting, but borrowers in related sectors should factor in potential cost and resource pressures.

ASX and Broader Sentiment

The S&P/ASX 200 has shown modest gains in early July, trading around the 8,800–8,850 level amid mixed global cues. Sector rotation continues, with defensives and resources influencing performance. Equity markets reflect cautious optimism, supporting M&A and acquisition finance activity.

Key Takeaways for Borrowers

• Tenders deliver results: independent broking remains the smartest way to access the best rates and terms across banks and non-banks.
• Preparation is key: strong financials, clear exit strategies, and professional documentation stand out in a selective lending environment.
• Opportunities exist: from asset finance and refinancing to development funding, well-structured deals are getting across the line, especially with the right adviser.

At Glenclair Financial, our focus on unbiased tenders, deep market knowledge, and tailored solutions for Sydney and NSW businesses positions us to help clients capitalise on these conditions. Whether you're refinancing, acquiring, developing, or expanding equipment assets, we're here to secure optimal outcomes.

Contact us today for a no-obligation Debt Health Check or to discuss your financing needs. Let's navigate the second half of 2026 together.

Alasdair King, Principal – Glenclair Financial
Independent Commercial Debt Specialists | Sydney, NSW