CBRE's Lending Momentum Index Eases to 1.0 as Lenders Compete on Price, Not Leverage: What Small-Balance Borrowers Should Do Now

On August 3, 2026, CBRE published its second-quarter lending figures, and the headline number moved in the opposite direction from the details underneath it. The CBRE Lending Momentum Index eased to 1.0, down from a five-year high of 1.5 in the first quarter — yet the number of commercial loans closed rose 11% year-over-year, average loan size grew 5%, and spreads tightened meaningfully. For investment-property borrowers in the $250k-$5M range, the release is worth reading closely, because the pattern it describes — lenders competing hard on price while holding the line on leverage — changes how you should be structuring and shopping a loan this fall.

What just happened

On August 3, 2026, CBRE reported that its Lending Momentum Index eased to 1.0 in Q2, down from a five-year high of 1.5 in Q1 and from 1.3 a year earlier. Yet the number of commercial loans closed rose 11% year-over-year and average loan size rose 5%, so the index softened on momentum, not lender appetite.

Here is the release in one table:

Spreads on fixed-rate permanent commercial loans narrowed 21 bps year-over-year to 204 bps, and multifamily spreads narrowed 15 bps to 162 bps. At the same time, loan-to-value ratios fell — commercial to 59.6% and multifamily to 63.3% — while debt service coverage improved to 1.43x and debt yields rose to 10.2%. Lenders are cutting price and tightening leverage at the same time.

The rate backdrop frames all of it. Per FRED, the 10-year Treasury stood at 4.67% as of August 27, 2026, while overnight SOFR sat at 3.65% as of August 28 — roughly a full percentage point of upward slope between the short end and the long end. CBRE's capital markets leadership pointed to that steep curve as the force pushing a meaningful share of would-be fixed-rate borrowers toward floating-rate structures. More on that below, because it is the single most actionable line in the release.

Why it matters for small-balance deals

For borrowers seeking $250k-$5M on investment property, the Q2 data rewards borrowers who shop widely and punishes borrowers who walk into one bank and accept the first term sheet. When lenders compete on price rather than leverage, quotes on the same deal can differ, and that gap is yours to capture or forfeit.

Three specifics from the release land directly on small-balance decisions:

More lenders are actually quoting. Loan count up 11% year-over-year is the cleanest signal of appetite, and the composition shift matters just as much: banks took 30% of non-agency closings, up from 24% a year ago, and alternative lenders — debt funds and credit companies — took 38%, up from 34%. CMBS share fell from 19% to 11%. For a small-balance borrower, that means the local and regional bank bid is genuinely back, and the debt-fund bid never left. A file that gets in front of both lender types has real negotiating leverage; a file that sees only one type is pricing off a partial market. This is the mechanics behind matching a deal against a wide book — our platform runs a submission against 20,000+ loan programs and typically returns 5–8 competing matches, precisely because composition shifts like this one change who the right lender is from quarter to quarter.

Proceeds are the constraint, not price. Falling LTVs and a 1.43x average DSCR mean the binding constraint on most deals right now is how much the lender will advance, not what they will charge. If your refinance math was built on a 70% advance, the market's center of gravity is telling you to plan for less and to solve the gap deliberately — with cash-in, a slightly longer amortization, or structure — rather than discovering it at term sheet.

Cheaper debt is real but selective. The average closed rate fell to 5.7% from 5.9%. That is a market average across strong sponsors and clean assets; it is a target to underwrite toward, not an entitlement. Debt yield at 10.2% is the quiet gatekeeper — if your NOI divided by your requested loan amount lands below roughly 10%, expect the proceeds conversation before the pricing conversation.

What it changes about structure choice

The steep yield curve changes the fixed-versus-floating decision more than any other input this quarter: with SOFR at 3.65% and the 10-year Treasury at 4.67% as of late August, a floating-rate loan starts roughly a point inside fixed on index alone. CBRE said this steepness is pushing borrowers toward floating-rate structures, and three caveats apply for small-balance borrowers.

First, floating only wins if your hold period and business plan fit it. A value-add deal you intend to renovate, stabilize, and refinance in 18-36 months is a natural floating-rate borrower right now: you pay the lower starting coupon, you buy a rate cap to bound the downside, and you keep prepayment flexibility so the exit refinance is not eaten by defeasance or yield maintenance. A stabilized asset you intend to hold seven-plus years is a different animal — locking 5-10 year money at spreads that are 21 bps tighter than a year ago is a genuinely good entry point, and the certainty is worth something even when the starting coupon is higher. See our glossary for how rate caps, yield maintenance, and step-down prepayment actually work.

Second, the leverage discipline in the data should push you to size the loan honestly before you shop it. With commercial LTVs centering near 60% and multifamily near 63%, the productive move is to run your own sizing three ways — LTV, DSCR at the actual quoted rate, and debt yield — and let the most conservative answer set your ask. Borrowers who request proceeds the market will not give burn weeks learning what a sizing table would have told them in minutes; our tools include calculators for exactly this.

Third, operating costs are now a structure input, not a footnote. Insurance is a line item that can move DSCR math hard in coastal and storm-exposed markets, including parts of Texas, where premiums can reshape coverage ratios on otherwise healthy small multifamily deals. If insurance growth is compressing your DSCR toward 1.25x, that argues for less leverage, longer amortization, or an interest-only period — decided upfront, not negotiated after retrade.

What to watch next

The next ninety days will tell you whether Q2's price competition extends into year-end or stalls, and three specific markers will answer that question faster than any headline. Watch them in order of immediacy, because each one maps to a concrete borrower decision — when to lock, when to float, and when to accelerate a refinance you have been deferring.

The September Fed meeting and the short end. Whatever the committee does, the borrower-relevant question is what happens to SOFR and to the forward curve after the decision. The floating-rate advantage documented above is a function of the curve's steepness; if the short end falls further, floating gets more attractive still, and if the curve flattens, the fixed-rate window is the story. Track the actual prints on FRED rather than the commentary.

The 10-year's trading range. The 10-year Treasury spent late August in the mid-4.6s to mid-4.7s. Fixed-rate quotes for small-balance permanent debt key directly off it, and with spreads already compressed to 204 bps, further improvement in your quoted rate has to come mostly from the Treasury side. If you are rate-sensitive on a refinance, set an alert level rather than watching daily.

Q3 lender composition. The bank share recovery (24% to 30%) and the CMBS retreat (19% to 11%) are the two lines to re-check when CBRE publishes its third-quarter figures. If banks keep gaining share, expect the price competition to persist and relationship-style term sheets to improve. If CMBS share keeps shrinking, small-balance conduit execution gets thinner and the bank/debt-fund comparison becomes the whole market. Either way, the right lender list next quarter will not be the right lender list from March — which is an argument for re-matching a deal rather than re-dialing last year's contacts. Our how it works page covers what a five-minute submission produces. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Submit Your Deal →

The bottom line

CBRE's August 3 release describes a lender's market in leverage and a borrower's market in price — spreads 21 bps tighter, LTVs a point-plus lower, loan counts up 11%. For $250k-$5M borrowers, the playbook that fits the data: size the loan conservatively before you shop it, take the fixed-versus-floating question seriously while the curve is this steep, and put every deal in front of both banks and alternative lenders, because the composition of who is winning loans is shifting quarter to quarter. The cost of shopping wide has never been lower; the cost of not shopping is now measurably higher. More context on reading lender data releases lives on our blog.