CBRE: Commercial Real Estate Lending Reaches Five-Year High in Q1 2026

Commercial real estate lending activity reached its highest level in five years during the first quarter of 2026, according to data released May 11 by CBRE. The firm's Lending Momentum Index — which tracks the pace of CBRE-originated commercial loan closings in the U.S. over a rolling 36-month period — rose to 1.5 at the end of Q1 2026, up from 1.2 in Q4 2025 and 0.3 a year earlier, marking the strongest reading since 2021.

Average Loan Size Increased 14% Year-Over-Year

The average loan size increased 14% year-over-year in Q1 2026, contributing to the index's upward momentum alongside more non-agency loan closings and relatively stable spreads. Commercial mortgage loan spreads declined by 2 basis points year-over-year to an average of 181 basis points, while multifamily loan spreads fell by 13 basis points year-over-year to 136 basis points. Both figures are based on fixed-rate, seven-to-10-year loans with 55% to 65% loan-to-value ratios.

Average commercial loan-to-value ratios increased to 61.5% in Q1 2026, up from approximately 59% a year earlier. Multifamily LTV ratios rose to 67.2% from 65% a year ago, reflecting a modestly less conservative posture among lenders. Loan constants declined by 10 basis points quarter-over-quarter to 6.7%, while average mortgage interest rates fell by 110 basis points quarter-over-quarter to 5.7%. Debt yield held within a stable range at 9.5% in Q1 2026, compared with 9.8% in Q4 2025 and 10.3% a year ago.

Alternative Lenders Dominate Non-Agency Loan Closings

Alternative lenders — including debt funds and mortgage REITs — led CBRE's non-agency loan closings in Q1 2026, accounting for 53% of total volume, up from 19% a year ago. Debt funds were the primary driver of that increase, with lending volume rising 280% year-over-year.

Banks held the second-largest share of non-agency loan closings at 22%, down from 34% a year ago. Life companies accounted for 17% of non-agency volume, compared with 21% a year ago. CMBS lenders represented the remaining 8%, down from 26% a year ago.

"We continue to see a more disciplined, yet increasingly healthy commercial real estate lending environment. Rising acquisition activity is driving meaningful price and value discovery, while fresh equity is helping rebalance lender and securitized portfolios," said James Millon, President and Co-Head of Capital Markets, U.S. and Canada, for CBRE.

Millon added: "Recapitalizations, particularly involving larger assets and portfolios, remain active, with well-structured financings often serving as the foundation for new joint ventures. Today, property owners and investors have a broader set of options to create liquidity beyond traditional sales, supporting strong market participation and capital absorption."

Multifamily and Agency Lending Show Strength

Government agency lending for multifamily assets remained strong in Q1 2026. Agency origination volume from Fannie Mae and Freddie Mac increased 35% year-over-year to $29.9 billion. CBRE's Agency Pricing Index, which tracks average fixed agency mortgage rates for seven-to-10-year permanent loans, fell by 42 basis points year-over-year to 5.4%.

About the CBRE Lending Momentum Index

The CBRE Lending Momentum Index tracks the pace of CBRE-originated commercial loan closings in the U.S. over a 36-month rolling period. Higher readings signal stronger lending momentum and improved market sentiment. The index rose from 0.3 in Q1 2025 to 1.5 in Q1 2026, its highest level since 2021.