Debt Funds Remain the Biggest Non-Agency Commercial Real Estate Lenders, CBRE Data Shows

Alternative lenders, a group led by debt funds and mortgage REITs, accounted for 38% of non-agency commercial real estate loan closings in the second quarter, according to CBRE's quarterly lending report. That was up from 34% a year earlier and made them the largest lender group outside the government-sponsored agencies.

Banks gained ground too. Their share rose to 30% from 24%, while the share held by CMBS lenders fell to 11% from 19%. Life insurance companies accounted for 21%.

The second-quarter picture

Non-agency closings by lender type	Q2 2025	Q2 2026
Alternative lenders (debt funds, mortgage REITs)	34%	38%
Banks	24%	30%
Life companies	—	21%
CMBS lenders	19%	11%

CBRE's Lending Momentum Index, which tracks the pace of commercial loan closings, stood at 1.0 in the second quarter. That was below the first quarter's five-year high of 1.5 and the year-earlier reading of 1.3. Even so, commercial loan volume was up 11% from a year earlier, and the average loan size rose 5%.

Underwriting remained conservative. Average loan-to-value ratios fell to 59.6% for commercial loans and 63.3% for multifamily. The average debt service coverage ratio rose to 1.43 from 1.34, and the average debt yield increased to 10.2%.

Competition showed up in pricing. Spreads on fixed-rate commercial mortgages narrowed by 21 basis points from a year earlier, to 204 basis points. "Fixed-rate lenders are making concessions on credit spreads to compete for product," said James Millon, president and co-head of capital markets at CBRE.

A different rate environment since then

CBRE's figures cover a quarter that ended before the Federal Reserve's Sept. 16 decision to raise its benchmark rate by a quarter point, its first increase since 2023. The 10-year Treasury yield, which anchors most fixed-rate commercial loan pricing, ended September above 5%, according to Treasury data. CBRE reported an average mortgage rate of 5.7% on second-quarter closings.

Higher base rates tend to favor floating-rate bridge lenders over long-term fixed-rate lenders. Borrowers who would rather not lock in a permanent loan at today's levels may choose shorter-term debt and wait. They also make it harder for those bridge loans to refinance later, which puts more weight on how lenders structure extensions and reserves.

That theme came up at the Mortgage Bankers Association's CRE Private Credit Council, which met on Sept. 23. Brent Truscott of Bloomfield Capital and Bryan Gross of Arena Investors discussed how lenders are reshaping deal terms to close transactions in the current climate, according to the MBA's summary of the meeting. MBA Deputy Chief Economist Joel Kan reviewed the economic outlook, including geopolitical effects on consumers and interest rates.

What it means for private lenders

The second-quarter data points to a market in which non-bank lenders hold the largest share of non-agency closings while banks compete again for the most conservative loans. With rates now higher, the lenders best placed are likely those with stable funding and structures that can absorb longer hold periods. Smaller private lenders that depend on bank lines, which are typically priced off floating benchmarks, will feel the Fed's move in their own cost of funds.