Lending momentum accelerated sharply in Q3, climbing to its strongest level since 2018, according to CBRE’s latest Lending Momentum Index. The index jumped 112% year-over-year to 1.04, driven by a 36% increase in permanent financing volume and robust September activity—clear signs that the debt markets are gaining traction again. Improved loan terms, narrower bid-ask spreads, and the cautious return of core capital sources are helping to close the gap between buyers and sellers, creating more deal flow across the board.
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Key Shifts in the Market• Spreads: Commercial loan spreads ticked up slightly to 197 bps, while multifamily spreads tightened by 27 bps from a year earlier to 141 bps, reflecting stronger agency pricing.• Rates & Leverage: Average mortgage rates dropped 28 bps quarter-over-quarter, and loan constants declined 20 bps, signaling more favorable financing conditions. Loan-to-value ratios edged higher to 63.8%, showing that lenders are easing conservatism modestly.
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Lender Activity: Who’s Driving the Recovery
Alternative lenders led the charge in non-agency lending, accounting for 37% of CBRE’s Q3 closings, up from 34% last year, powered by a 68% surge in debt fund volume. Banks made a notable comeback as well, increasing their share to 31% from 18%, with originations soaring 167% year-over-year. CMBS lenders also re-entered the picture, now making up 17% of activity, up from just 5% a year ago amid renewed private-label issuance.
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Agency Lending on the Rise
Government-sponsored enterprises (GSEs) stepped up their multifamily lending efforts, originating $44.3 billion in Q3, a 57% annual and 53% quarterly gain. CBRE’s Agency Pricing Index fell to 5.6%, down 27 bps year-over-year—evidence of more competitive, borrower-friendly pricing.
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The Takeaway: Risk Appetite Is Returning
Capital is once again flowing into commercial real estate as lenders seek opportunities to place funds. Lower borrowing costs, expanding participation from alternative capital, and renewed activity from banks and agencies point toward continued growth heading into 2026—particularly in multifamily, industrial, and data center sectors.