The Federal Open Market Committee (FOMC) voted at its January meeting to maintain the target range for the federal funds rate at 3.50% to 3.75%. Two members dissented, preferring to lower the target range by 1/4 percentage point. Economic indicators reviewed by the Fed signal a solid expansion in activity, underpinned by resilient consumer spending and a continued rise in business fixed investment. In contrast, the housing sector remains a point of weakness. While the labor market showed stability with a 4.4% unemployment rate in December, core PCE inflation stood at 3.0%, above the Fed's 2% mandate.

“Since last September, we have lowered our policy rate 75 basis points, or 3/4 of a percentage point, bringing it within a range of plausible estimates of neutral,” said Fed Chair Jerome Powell. “This normalization of our policy stance should help stabilize the labor market while allowing inflation to resume its downward trend toward 2 percent once the effects of tariff increases have passed through. We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks.”

2025 Momentum Set to Carry into 2026

Matt Swerdlow, Senior Director in the Capital Services Group, credited favorable economic indicators and lower interest rates for the positive momentum in the commercial real estate market in 2025—a trend he expects to continue into 2026.

“Borrowers are optimistic that they can make their business plans work,” Swerdlow said. “Sellers are adjusting their prices to meet the market, and the availability of capital is at an all-time high with competition for deals putting downward pressure on spreads.”

Lenders Bullish on Commercial Real Estate

According to the latest report from the Mortgage Bankers Association, real estate debt increased to $4.93 trillion at the end of Q3 2025, up 4% from the previous year. Of the total, multifamily mortgage debt rose 5.9% year-over-year to $2.24 trillion and accounted for 22.5% of all the total commercial debt.

Federal agency and government sponsored enterprises and mortgage-based securities held the largest share of multifamily debt outstanding at $1.11 billion (50%); banks and thrifts with $651 billion (29%); life insurance companies with $263 billion (12%); state and local government with $93 billion (4%); and CMBS, CDO and other ABS issues with $70 billion (3%). Non-financial corporate business lenders saw the largest percentage increase in their holdings of multifamily mortgage debt from Q2 2025 to Q3 2025, up 7.3% to $1.4 billion.

Recent Capital Services Finance Transactions

The Capital Services Group had a milestone year in 2025, nearly doubling its performance from 2024.

“Recent debt placements made by our team illustrate the lending landscape in New York City for construction, refinance and acquisition loans,” Swerdlow said. These include:

• A $12 million construction completion loan for a 27,000-square-foot, 60-unit, three-building multifamily project in Sunnyside, Queens. The new loan increased total proceeds by approximately $1.75 million to the existing financing and reduced the borrower’s interest rate by more than 600 basis points. The loan was structured at 65% loan-to-cost with a 7.25% initial interest rate, a two-year interest-only period, and a five-year term.
• A $4.57 million refinance loan for a three-property mixed-use portfolio in Prospect Lefferts Gardens, Brooklyn, featuring 15 residential units and four commercial units. Terms for the five-year non-recourse loan included a 5.4% rate, 30-year amortization and 75% LTV.
• A $2.25 million acquisition loan for a 23-unit mixed-use, 95% rent stabilized building in Northern Manhattan. Terms of the five-year non-recourse loan featured a 5.92% rate and 75% LTV.

What to Expect from Lenders this Year

“Nearly $936 billion in commercial real estate loans are scheduled to mature in 2026 but unlike a year or two ago, borrowers have more loan options today,” Swerdlow said. “Indices are coming down and we anticipate the Fed will make one rate cut in the first half of the year.”

The multifamily sector will see an increase in liquidity in 2026 with Fannie Mae and Freddie Mac loan purchase caps rising to $88 billion apiece for a total of $176 billion, the largest caps ever granted and up from $146 billion in 2025.

Non-agency CMBS originations, which rose to the highest level since the Global Financial Crisis last year (up 21% to $125.6 billion) are expected to increase by about 20% to around $150 billion this year, according to Trepp.

Private credit funds will continue to lend more aggressively by competing with agency and balance sheet lenders with their five-year, fixed-rate product. Construction and value-add deals will continue to be a focus as well.

Swerdlow concluded, “With falling indices, record agency liquidity, and a revitalized CMBS market, borrowers facing 2026 maturities are entering a lending environment defined more by competitive opportunity than by the constraints of recent years.”