Fueled by Office, Retail and Hotel Sectors in Q3

Commercial and multifamily mortgage lending gained strong momentum in the third quarter of 2025, as property values stabilized and refinancing activity accelerated across several asset classes.

According to new data from the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, total loan originations climbed 36% year-over-year and 18% quarter-over-quarter, marking the fifth consecutive quarter of growth in both annual and sequential terms.

"Commercial and multifamily borrowing has now increased for five straight quarters on both a quarterly and annual basis," said Reggie Booker, MBA's Associate Vice President of Commercial/Multifamily Research. "Lending activity increased last quarter across most major property types and capital sources, led by particularly strong growth in office, retail, and hotel properties. While some sectors, such as health care and industrial, saw slower activity, overall volumes reflected improving sentiment as property values stabilized and loans reaching maturity were refinanced."

Lending Volumes Jump Across Key Property Types

Year-over-year growth was broad-based but heavily concentrated in property sectors that had lagged earlier in the cycle. Office loan originations surged 181% from the same quarter a year earlier, reflecting renewed investor confidence and refinancing of maturing debt. Retail properties followed with a 100% gain, while hotel loan originations rose 66%, and multifamily lending increased 27%.

Industrial properties posted a modest 5% rise, while health care loan originations fell 43% year-over-year, underscoring uneven demand in the medical real estate segment.

Investor-Driven Lenders Lead the Charge

From a capital-sources perspective, lending growth was strongest among investor-driven lenders, which expanded their origination volumes by 83% compared to last year. Depository institutions followed with a 52% increase, while government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac saw a 40% gain.

Originations for commercial mortgage-backed securities (CMBS) loans rose 5%, while life insurance companies experienced a 4% decline, reflecting more selective underwriting amid volatile long-term rates.

Quarter-Over-Quarter Gains Reinforce Uptrend

On a sequential basis, commercial and multifamily lending remained robust. Compared with the second quarter of 2025, retail property originations jumped 141%, hotel lending rose 76%, office loans climbed 67%, and multifamily originations increased 12%.

Health care lending dipped 6% from the prior quarter, while industrial originations fell 17%, suggesting a temporary slowdown in segments that had been among the earliest to recover post-pandemic.

Capital Sources Show Continued Confidence

Among lender categories, GSE loan volume rose 37% quarter-over-quarter, depository institutions increased 36%, and CMBS lending grew 31%. Investor-driven lenders reported a 14% rise, while life insurers pulled back by 22%, marking the only major capital group to reduce lending activity from the prior quarter.

Recovery Broadens Beyond Multifamily

The third quarter's strong performance underscores a shifting dynamic in commercial real estate finance: the recovery is expanding beyond the multifamily sector to include previously distressed property types like office and retail. With refinancing needs high and investor sentiment improving, analysts say the lending rebound could extend into 2026--provided interest rates stabilize and asset valuations continue to firm.