Commercial Real Estate Lending Momentum Continues to Improve

Commercial real estate lending conditions continued to improve in the fourth quarter of 2025, supported by higher loan origination volumes, increased average loan sizes, relatively stable spreads and improved loan-to-value ratios, according to the latest research from CBRE.

The CBRE Lending Momentum Index, which tracks the pace of CBRE-originated commercial loan closings in the U.S., increased 67% year-over-year (up 0.48 points) to 1.2 at the end of Q4 2025, reaching levels comparable to 2018. This growth was driven by a 26% year-over-year increase in permanent loan financing, with December marking the highest monthly level since 2021.

Commercial mortgage loan spreads were unchanged from Q3 2025 at an average of 197 basis points (bps) in Q4 2025, while multifamily loan spreads rose by 1 bp quarter-over-quarter to 142 bps. These figures are based on fixed-rate, seven-to-10-year loans with 55-to-65% loan-to-value (LTV) ratios.

“We are seeing a bifurcated but increasingly healthy commercial real estate lending market. While we see rising delinquencies and legacy loan sales in the secondary markets, these are being easily absorbed by a deep pool of capital. Directionally, credit spreads continue to tighten, backed by a strong liquidity profile and nearly 100% market participation,” said James Millon, President & Co-Head of Capital Markets, U.S. & Canada, for CBRE.

Alternative lenders, including debt funds and mortgage REITs, led CBRE’s non-agency loan closings in Q4 2025, accounting for 40% of total volume, up from 23% a year ago. Debt funds were the primary driver, with lending volume increasing 112% year-over-year.

Banks held the second-largest share of non-agency loan closings at 35%, down from 43% a year ago, although bank origination volume increased 73% quarter-over-quarter, reflecting continued re-engagement in the market.

Life companies accounted for 19% of non-agency loan volume in Q4 2025, down from 33% a year ago, while CMBS lenders represented 7% of non-agency loan volume, up from 1% a year ago. CMBS lending volume was approximately six times higher than the prior year, supported by active private-label CMBS issuance, as market-level issuance reached $158 billion in 2025, its highest annual total since 2007.

Key underwriting metrics improved modestly in Q4 2025. Loan constants and mortgage interest rates declined by 10 and 15 bps, respectively, from Q3 2025, while debt service coverage ratios increased to 1.36 from 1.35. Despite lower borrowing costs, lender prudence persisted, with debt yields increasing 9 bps to 9.8%.

Average commercial LTV ratios increased to 60.9% in Q4 2025, up from 60.0% a year ago, while multifamily LTV ratios rose to 66.2% from 65.9% a year ago, reflecting a modestly less conservative approach by lenders.

Government agency lending for multifamily assets remained strong. Agency origination volume increased 23% quarter-over-quarter and 4% year-over-year to $55 billion in Q4 2025, bringing full-year 2025 agency lending to $150 billion, a 25% increase from 2024. CBRE’s Agency Pricing Index, which tracks average fixed agency mortgage rates for 7-to-10-year permanent loans, fell by 18 bps quarter-over-quarter and 9 bps year-over-year to 5.3%.

Notes to Editors
The CBRE Lending Momentum Index tracks commercial real estate loans that are either originated or brokered by CBRE. Higher readings for the index indicate stronger lending momentum and a greater appetite for risk in the commercial real estate market.