Commercial borrowers may increasingly favor shorter-term loans in 2026 as the steeper Treasury yield curve alters financing costs, according to the Mortgage Bankers Association's latest forecast. The trade group expects only one federal funds rate cut this year, with inflation remaining above the Federal Reserve's 2% target.
Persistently large federal deficits and pressure on sovereign debt markets are expected to keep long-term rates elevated, with the 10-year Treasury yield averaging about 4.2%.
This environment, combined with growing confidence that property values have stabilized, is setting up another strong year for loan originations. MBA projects total commercial mortgage origination volume to rise to $805.5 billion in 2026, up from $633.7 billion last year. Multifamily lending is expected to account for roughly half that total, reaching $399.2 billion, compared with $330.6 billion in 2025.
"The U.S. economy continues to grow, but unevenly," said Mike Fratantoni, MBA's chief economist and senior vice president for research and business development.
"The job market is softening, driven primarily by slower hiring, while the pace of layoffs is beginning to pick up. Inflation is likely to rise further, at least in part due to the pass-through of tariffs to consumers."
MBA forecasts U.S. GDP growth of 2.3% in 2025, with the rate slowing to 1.9% this year and 1.7% in 2027. The unemployment rate is projected to average 4.5% in 2026, up slightly from 4.3% in 2025.
Strong loan demand late last year suggests a substantial pipeline heading into 2026. Much of that volume was driven by refinancing and acquisition activity as borrowers took advantage of relatively favorable rates before recent increases.
"Commercial originations increased year-over-year during the first six months, and this growth continued in the second half of the year," said Judith Ricks, associate vice president of CREF research at MBA.
"The multifamily market experienced similar strength throughout the year, and that is expected to continue in 2026."
MBA expects refinance activity to pare down the amount of mortgage debt scheduled to mature in the next few years. Delinquency rates across property types and capital sources ticked up slightly between the first and third quarters of 2025 and with many loans still maturing this year, older-vintage debt could face additional stress.
While the maturity wall has eased somewhat, refinancing needs remain elevated. Against the backdrop of a steeper yield curve, borrowers may structure shorter loan terms as they navigate a higher-for-longer rate environment.
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