BOSTON–U.S. commercial real estate lending strengthened notably in the third quarter of 2025, propelled by stabilizing borrowing costs and narrowing credit spreads that helped close pricing gaps between buyers and sellers, according to new data from CBRE.
CBRE’s Lending Momentum Index, which tracks the pace of CBRE-originated loan closings, rose 112% year-over-year to 1.04 at the end of Q3—its highest reading since 2018. Much of the improvement came from a 36% annual increase in permanent loan financing, with particularly strong execution in September.
Commercial mortgage loan spreads widened modestly to an average of 197 basis points in Q3, up slightly from the prior quarter and 14 bps from a year earlier. By contrast, multifamily loan spreads tightened to 141 bps, a 27-bps year-over-year decline reflecting more competitive pricing from agency lenders. These metrics represent fixed-rate, seven- to ten-year loans with 55–65% loan-to-value ratios.
“We’re seeing a broad recovery in investment sales across major property types, led by high-conviction sectors like multifamily and industrial,” said James Millon, President & Co-Head of Capital Markets, U.S. & Canada, for CBRE. “Core capital is beginning to return selectively, shaping equity pricing in key markets and building momentum. Stabilizing financing costs—supported by the five-year Treasury holding in the mid-3% range—combined with tightening credit spreads are narrowing the bid-ask gap and fueling transactions.”
Millon added that office financing and sales volumes have “surged by multiples, not percentages,” particularly for high-quality assets in growth markets. Construction activity remains elevated as well, supported by demand for build-to-core multifamily projects and large-scale data centers. CBRE expects current momentum to continue into 2026.
Alternative Lenders Gain Share as Banks Re-Enter the Market
Alternative lenders—including debt funds and mortgage REITs—led non-agency loan closings in Q3 with a 37% share, up from 34% a year ago. Debt funds were the largest contributor, with lending volumes rising 68% year-over-year.
Banks captured a 31% share, a sharp increase from 18% last year, driven by a 167% jump in origination volume, marking a robust reentry into the lending market. CMBS lenders also expanded sharply, increasing their share to 17%, up from 5% a year earlier on the strength of a fivefold increase in activity.
Life companies accounted for 16% of non-agency loan closings, down significantly from 43% last year.
Financing Conditions Show Continued Improvement
Several key metrics reflect a more accommodating lending environment:
- Loan constants fell 20 bps quarter-over-quarter.
- Mortgage rates declined 28 bps.
- Average loan-to-value ratios ticked up to 63.8%, suggesting lenders are taking a slightly less conservative posture.
Government-sponsored agency lending for multifamily assets totaled $44.3 billion in Q3, representing a 53% increase quarter-over-quarter and 57% increase year-over-year. CBRE’s Agency Pricing Index, which tracks average fixed-rate agency mortgage rates for seven- to ten-year permanent loans, declined to 5.6%, down 13 bps from Q2 and 27 bps from a year earlier.
