After years of tightening, banks are starting to ease credit standards for multifamily loans. At the same time, demand for construction and land development financing shows renewed strength, according to the Federal Reserve's January 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) and new analysis from Trepp.
Trepp reported that the net percentage of banks tightening standards for multifamily loans fell from 1.6% in the third quarter of 2025 to –5.5% in the fourth quarter. That marks the first period of net loosening since the stretch from early 2021 to early 2022—and before that, not seen since 2015.
The shift follows several quarters, dating back to late 2023, when the percentage of banks tightening standards was still positive but had been declining. Trepp observed that lending is adjusting to lower policy rates and reduced near-term rate uncertainty following the Federal Reserve's rate hikes to curb inflation.
Further supporting the trend, Trepp's Anonymized Loan Level Repository (T‑ALLR) shows near-record tight loan spreads. The dataset, which aggregates balance sheet loan information from multiple banks, identified the most common multifamily loan structures as 60% loan-to-value with interest-only terms. Current spreads under those terms average 160.7 basis points, just 3.2 basis points shy of the record-tightest level in Trepp's records.
Overall, the data points to a multifamily lending market in transition, moving toward looser standards as credit conditions settle into what Trepp described as "a new equilibrium."
On the construction side, the latest SLOOS indicates rising loan demand in the fourth quarter of 2025. A net 27.8% of large banks—those with at least $100 billion in domestic assets—and 8.9% of all domestic banks reported stronger demand for construction and land development loans. Although "other" banks reported no net increase in demand, that was a notable recovery from –19.5% in the prior quarter. For domestic banks overall, demand turned positive for the first time since late 2021, while large financial institutions have remained net positive since late 2024.
Lending standards for construction and land development loans also eased slightly, with a net –5.6% of large banks tightening standards compared with 1.8% of all domestic banks and 5.3% of others.
Trepp's T‑ALLR data further shows that construction loan pricing remains competitive. The median spread for loans with 55%- to- 65% LTV ratios stood at 238 basis points in Q4 2025, up modestly from 235 basis points a year earlier but as much as 72 basis points lower than most quarters since 2021.
"The January 2026 SLOOS doesn't suggest construction lending is 'wide open,' but it does show conditions moving away from broad-based caution," Trepp noted.
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