U.S. commercial real estate lenders closed out 2025 with renewed momentum, as capital returned to the market and underwriting conditions showed incremental easing, according to CBRE Group research.
Loan originations accelerated sharply in the fourth quarter, with CBRE’s Lending Momentum Index climbing 67% from a year earlier to 1.2–roughly in line with pre-pandemic activity levels seen in 2018. The rebound was fueled in part by a 26% increase in permanent financing, with December posting the strongest monthly volume since 2021.
Borrowing costs and credit conditions remained broadly stable. Commercial mortgage spreads held at 197 basis points during the quarter, while multifamily spreads edged up slightly to 142 basis points. At the same time, modest improvements in underwriting metrics signaled a cautiously improving risk environment: debt service coverage ratios ticked higher, and both loan constants and mortgage rates declined from the prior quarter.
Still, the recovery remains uneven beneath the surface. “The market is bifurcated but increasingly healthy,” said James Millon, CBRE’s U.S. and Canada capital markets co-head, noting that rising delinquencies and legacy loan sales are being absorbed by deep pools of liquidity. Tightening credit spreads and near-full participation across lender types underscore the sector’s improving footing.
Alternative lenders continued to expand their footprint, accounting for 40% of non-agency loan closings–up sharply from a year earlier. Debt funds drove much of that growth, with volumes more than doubling year-over-year. Banks, while still active, ceded share to these private credit players even as their own origination volumes rebounded on a quarterly basis.
Meanwhile, securitized lending staged a notable comeback. CMBS issuance surged in 2025, with annual volumes reaching $158 billion–the highest since 2007–lifting CMBS lenders’ share of non-agency originations to 7%, up from just 1% a year earlier.
Leverage levels also crept higher, reflecting a modest shift toward less conservative lending. Average loan-to-value ratios rose to 60.9% for commercial assets and 66.2% for multifamily properties, suggesting lenders are gradually loosening constraints as confidence improves.
Government-backed multifamily lending remained a pillar of the market. Agency volumes rose to $55 billion in the fourth quarter, pushing full-year originations to $150 billion–up 25% from 2024. At the same time, agency mortgage rates declined to an average of 5.3%, further supporting borrowing activity.
The data point to a commercial real estate credit market regaining traction after a period of stress, with liquidity deepening even as legacy risks continue to work their way through the system.
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