Commercial real estate lending picked up speed in Q2, led by alternative lenders and banks, even as early-spring policy jitters temporarily slowed the pace.

Market rebounds after brief pause:

The CBRE Lending Momentum Index posted a 45% year-over-year jump to 275—well above its five-year pre-pandemic norm—despite a modest 6% pullback from Q1. The slowdown in April and May, tied to tariff-related uncertainty, gave way to a sharp June recovery fueled by tighter credit spreads and growing investor confidence.

Shifting lender mix:

Non-bank lenders captured the largest non-agency share at 34%, with debt fund activity surging 89% from the prior quarter. Banks followed at 24% of the market—down in share but up 17% in volume—while life companies held 23%. CMBS lenders doubled their market share to 19%, tripling volumes year-over-year on the strength of private-label issuance.

Looser terms, higher leverage:

Credit conditions eased as average LTVs climbed to 63.3% and DSCRs slipped to 1.34. Interest-only loans gained traction, loan constants fell 21 bps, and mortgage rates averaged 6.0%—16 bps lower than last quarter. Multifamily spreads narrowed to 150 bps on competitive agency pricing, while commercial spreads edged up to 193 bps.

Agencies dominate multifamily:

Agency multifamily volume jumped to $28.9 billion—up 31% quarter-over-quarter and 43% year-over-year—supported by lower GSE fixed rates averaging 5.7%.

The takeaway:

Capital is available, but selective. Non-bank lenders and a resurgent CMBS market are stepping in for deals that underwrite well, while agencies offer the most cost-effective multifamily financing. Owners with steady cash flow or assets priced below replacement cost may want to lock in terms in Q3—before policy-driven volatility pushes spreads wider again.