Commercial real estate lending in 1Q 2026 reached its highest level in five years as lenders have gained more confidence in loan-to-value ratios and fresh equity entered the market, giving borrowers more choices about their lenders.
These trends were revealed in CBRE's Lending Momentum Index, which tracks the pace of CRE loans that the company either originated or brokered over a 36-month period. A higher index indicates stronger lending momentum for CRE.
The index rose to 1.5 at the end of Q1 2026, up from 1.2 in Q4 2025 and from 0.3 a year earlier—marking the highest level seen since 2021. The average loan size increased by 14% in Q1 2026 compared to 1Q 2025.
There was a two-basis-point dip in CRE loan spreads year-over-year to an average of 181 bps in the first quarter. Multifamily loan spreads fell by 13 bps to 136 bps in the same period. These figures are based on fixed-rate, seven-to-10-year loans with 55-to-65 % loan-to-value (LTV) ratios.
Lenders were taking a more disciplined but healthy approach, commented James Millon, CBRE's president and co-head of capital markets for the U.S. and Canada.
"Rising acquisition activity is driving meaningful price and value discovery, while fresh equity is helping rebalance lender and securitized portfolios," he added.
"Recapitalizations, particularly involving larger assets and portfolios, remain active, with well-structured financings often serving as the foundation for new joint ventures."
Millon also pointed to changes in the composition of the lending community that have given investors and owners more choices in financing sources.
For example, the role of alternative lenders has more than doubled since 1Q 2025, rising from just 19% to 53%. This category includes mortgage REITs and especially debt funds, whose lending volume rose 280% over the year.
In contrast, the share of other lenders dropped sharply over the year. Non-agency loans made by banks fell from 34% to 22% over the period, life companies dipped from 21% to 17%, and CMBS lenders accounted for just 8% of non-agency loans, down from 26% the previous year.
"Today, property owners and investors have a broader set of options to create liquidity beyond traditional sales, supporting strong market participation and capital absorption," Millon commented.
There was a modest easing in borrowing costs in the first quarter. Average mortgage interest rates fell by 110 bps quarter-over-quarter to 5.7%. Debt yield was stable at 9.5%, down from 9.8% the previous quarter and 10.3% a year ago.
There was also a modestly less conservative approach by lenders. Commercial loan-to-value ratios rose from 59% a year earlier to 61.5%, while multifamily LTV ratios rose to 67.2% from 65% a year ago.
Multifamily also benefited from increased lending by government agencies Fannie Mae and Freddie Mac, which spiked 35% over the year to $29.9 billion in the first quarter. Another CBRE tool, its Agency Pricing Index, which tracks average fixed agency mortgage rates for seven-to-10-year permanent loans, fell by 42 bps year-over-year to 5.4%.
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