Q4 Market Update: Lender Insights

As we enter the final stretch of 2025, the capital markets continue to evolve across every lender segment. Our producers connected directly with life companies, agencies, banks, and private capital providers to gather the latest insights on pricing, structure, and sentiment. Below is a snapshot of what we’re hearing in real time across the market.

Life Insurance Companies

As we’re now two weeks into Q4, the window to get a deal done by year-end is nearly closed, and lenders are stacking the deck for January closings. As the treasury began its descent in mid-summer and corporate spreads have tightened, the Life Companies have provided some of the all-in rates that we’ve seen in recent years. Bottom of the barrel pricing for multifamily and industrial can be as low as +1.25% over the treasury. Life Companies have been going toe-to-toe with the agencies in select scenarios as well, offering interest-only, leverage, etc. Life Companies have found other creative solutions to win on core opportunities, either with structure, prepayment flexibility or even offering a floating rate option. As many Life Companies have slowly rebalanced their office exposure, the overall sentiment towards office deals is slowly turning the corner. As we head into a new year, the directive is to continue meeting the market with creative solutions, winning on pricing, and providing the market with the highest-level certainty of execution.

-Jacob Lee, Vice President

Agencies

Agency activity remains elevated through Q4 as both Fannie Mae and Freddie Mac approach their annual production caps of roughly $73 billion each. Both continue to emphasize repeat sponsors and mission-driven or affordable executions while maintaining disciplined underwriting across conventional and small-balance programs. Freddie Mac’s Small Balance (SBL) platform, covering loans from $1–6 million, remains active and differentiated with its non-recourse, 30-year amortization, and flexible prepayment structures that continue to attract borrower interest.

Across both platforms, rates have widened roughly 10–20 basis points over the past several weeks amid a surge in year-end submissions. Current all-in coupons are generally in the mid-5% to low-6% range, depending on leverage and sponsorship strength. However, turn times have slowed materially, with many lenders reporting 3+ weeks just to receive quotes as agency desks manage unprecedented volume. While early expectations point toward 2026 allocations being at or slightly above 2025 levels, we’ll see how that develops once FHFA announces new caps later this year, likely between mid-November and mid-December.

-Grady Seldin, Vice President

Private Capital

Over the last 3 years, private capital has emerged to fill voids in the market that have been left by the conventional capital sources. Private capital – most often in the form of bridge debt or preferred equity – has been an increasingly prevalent and necessary tool in our markets. PSRS has been actively involved on all sides of this emerging capital source, acting as a procuring source for borrowers but also identifying opportunities whereby our clients can participate on the lending side. Private capital has many advantages, stemming from the lack of conventional regulation and processes. Our clients have trusted us in many cases to act quickly and to vet lending sources for time-sensitive needs. In the world of transitional capital, certainty of execution is hard to come by…which is where our firm adds tremendous value. Our capital relationships are extended to our clients, which matters greatly when timing and terms are unique and urgent.

-Seth Ludwick, Principal

Banks

The current bank lending environment for commercial real estate (CRE) is characterized by tighter credit standards, selective lending, and a focus on relationship-driven deals. Banks are requiring minimum debt service coverage ratios (DSCRs of 1.25x–1.35x), with stronger thresholds, up to 1.40x, for higher-risk property types such as office or hospitality. Many lenders are also tying approvals to relationship deposit requirements, typically ranging from 5% to 10% of the loan amount or a minimum balance commitment to strengthen funding stability. Average market interest rates for stabilized properties are generally in the 6.5%–7.25% range for 5- to 10-year fixed-rate bank loans, while transitional or higher-risk assets may price 75–150 basis points higher, depending on leverage and structure. With elevated funding costs, regulatory attention on CRE concentrations, and pressure on liquidity, banks are prioritizing experienced sponsors, lower leverage (55%–65% LTV), and properties with durable cash flow. Overall, lending remains available but conservative, focused on quality borrowers, strong collateral, and meaningful deposit or banking relationships.

-Tony Messiah, Vice President