Commercial real estate lending conditions strengthened further in the fourth quarter of 2025, supported by rising loan origination volumes, larger average loan sizes and improving underwriting metrics, according to new research from CBRE.
CBRE’s Lending Momentum Index, which tracks the pace of U.S. commercial loan closings originated by the firm, rose 67% year over year to 1.2 at the end of Q4 2025, an increase of 0.48 points. The index reached levels comparable to those last seen in 2018, signaling a broad recovery in lending activity. Growth was driven largely by a 26% year-over-year increase in permanent loan financing, with December recording the highest monthly origination volume since 2021.
Commercial mortgage loan spreads remained stable quarter over quarter, averaging 197 basis points in Q4 2025, based on fixed-rate loans with seven- to 10-year terms and loan-to-value ratios between 55% and 65%. Multifamily spreads edged up slightly, increasing by one basis point to 142 basis points.
“We are seeing a bifurcated but increasingly healthy commercial real estate lending market,” said James Millon, president and co-head of capital markets for the U.S. and Canada at CBRE. “While rising delinquencies and legacy loan sales persist in secondary markets, they are being readily absorbed by a deep pool of capital. Credit spreads continue to tighten, supported by strong liquidity and nearly full market participation.”
Alternative lenders continued to gain market share in non-agency lending during the quarter. Debt funds and mortgage REITs accounted for 40% of CBRE’s non-agency loan closings in Q4 2025, up from 23% a year earlier. Debt funds led the category, with lending volumes increasing 112% year over year.
Banks held the second-largest share of non-agency lending at 35%, down from 43% a year ago. However, bank origination volume increased 73% quarter over quarter, reflecting renewed engagement in commercial real estate lending. Life insurance companies represented 19% of non-agency loan volume, down from 33% a year earlier, while CMBS lenders accounted for 7%, up sharply from 1% in Q4 2024.
CMBS lending activity increased approximately sixfold year over year, supported by a resurgence in private-label issuance. Total market-level CMBS issuance reached $158 billion in 2025, the highest annual total since 2007.
Underwriting conditions showed modest improvement in Q4. Loan constants declined by 10 basis points from the prior quarter, while mortgage interest rates fell 15 basis points. Debt service coverage ratios increased slightly to 1.36 from 1.35. Despite easing borrowing costs, lenders maintained discipline, with debt yields rising 9 basis points to 9.8%.
Loan-to-value ratios also trended higher, indicating a measured easing in lender conservatism. Average commercial LTVs rose to 60.9% in Q4 2025 from 60.0% a year earlier, while multifamily LTVs increased to 66.2% from 65.9%.
Government-sponsored agency lending remained a key source of capital for multifamily assets. Agency origination volume increased 23% quarter over quarter and 4% year over year to $55 billion in Q4 2025, bringing total agency lending for the year to $150 billion, a 25% increase from 2024. CBRE’s Agency Pricing Index showed average fixed-rate agency mortgage rates for seven- to 10-year loans declined to 5.3%, down 18 basis points from Q3 and nine basis points from a year earlier.
