Commercial Lenders Have Increased Property Selectivity
New data reveals shifting loan-to-value requirements across various property sectors in the United States.
Updated on Sept. 21, 2026 in Commercial
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CRED iQ has reported a rise in selectivity among commercial mortgage-backed security lenders over the past year. Issuers are now favoring multifamily and office projects while requiring more equity for other asset classes.
Why it matters
This shift indicates that lenders believe office property cash flows have reached a point of stability. Meanwhile, the demand for higher sponsor equity in sectors like retail reflects a move to mitigate potential funding gaps.
Multifamily loan-to-value ratios hit 62 percent with an average interest rate of 6 percent, while office ratios rose to 49.5 percent. Conversely, retail loan-to-value ratios fell to 47.8 percent as debt yields for retail reached 20.3 percent.
The players
CRED iQ
This organization provides data and intelligence services specifically for the commercial real estate finance and investment markets.
The details
Lenders have adjusted their underwriting to increase loan-to-value ratios for multifamily and office properties while simultaneously tightening requirements for self-storage and industrial sectors. The blended loan-to-value ratio for conduit CMBS loans currently sits at 55.6 percent.
Timeline
Over the past 12 months, the lending market has become increasingly selective with equity requirements.
Culture Shift
This development highlights a distinct divergence in the commercial mortgage-backed security conduit lending cycle across property types. Such shifts are indicative of broader institutional efforts to manage risk by reallocating capital based on perceived asset stabilization.
Investors and developers may face tighter equity requirements if they are working on retail or industrial projects. Conversely, those focused on multifamily properties may find current market conditions more favorable for securing financing.
The takeaway
Commercial property owners should be prepared for varying levels of scrutiny depending on their specific asset class. Sponsors may need to adjust their capital stacks to accommodate the growing requirement for increased equity in non-multifamily sectors.
Further reading
For more on the industry, visit Commercial.
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