If you’re waiting for the 3% interest rates of 2021 to come back, I’ve got some tough news for you. They aren’t coming. Honestly, the industry has finally stopped holding its breath for a "return to normal" because 2026 is the new normal.
Right now, as of mid-January 2026, average commercial real estate loan rates are hovering in a wide but stabilizing band between 5.17% and 12.75%. That's a massive range. Why? Because a multifamily complex in a growing Midwest suburb is a completely different risk than a half-empty office tower in a coastal metro.
The market is currently wrestling with a weird paradox. The Federal Reserve has been trimming the federal funds rate—it’s sitting around 4.00% to 4.25%—but longer-term commercial mortgage rates haven't dropped nearly as much as people hoped. You've basically got a tug-of-war between the Fed and the Treasury yields.
Why "Average" Rates are a Total Lie
I hate the word "average" in this business. It’s misleading. If you walk into a bank today, they aren't going to give you an "average" rate; they’re going to look at your Debt Service Coverage Ratio (DSCR) and the specific asset class.
For instance, multifamily is still the golden child. You can find rates as low as 5.11% for larger deals (over $6 million). But if you’re looking at a hospitality project or a niche retail center, you’re looking at 6.50% to 8.75% for a conventional loan.
Here is the rough breakdown of where things stand right now for various property types:
📖 Related: Wells Fargo Bank Cambridge MN: What You Need to Know Before Heading In
- Multifamily (Apartments): 5.11% – 6.22%
- Industrial & Self-Storage: 6.08% – 7.25%
- Retail & Office: 6.17% – 8.00%
- Hospitality (Hotels): 6.50% – 9.00%
- SBA 504 (Owner-Occupied): 5.67% – 5.92%
The reality is that lenders are being incredibly picky. They’ve got a "wall of maturities" to deal with—roughly $1.8 trillion in commercial debt is coming due this year. Lenders are terrified of a wave of defaults, so they’re padding their spreads. You might see the 10-year Treasury at 4.15%, but the lender’s spread is still 150 to 300 basis points on top of that.
The Fed vs. Reality: Who's Actually Winning?
Jerome Powell’s term ends in May 2026. That’s creating a lot of "wait and see" energy in the market. Some analysts, like the team over at J.P. Morgan, are predicting the Fed might actually stop cutting rates altogether this year if the job market stays tight.
If you're tracking the average commercial real estate loan rates, you have to watch the 10-year Treasury yield more than the Fed's announcements. When inflation fears spike—even a little—those Treasury yields jump, and your quoted rate follows suit within hours.
I talked to a developer last week who was quoted 6.20% on a Tuesday and 6.45% by Friday. Same project. Same bank. The market is just that sensitive to the daily bond fluctuations right now.
The Rise of the Bridge Loan
Because traditional banks are so tight-fisted, bridge loans have become the "necessary evil" of 2026. If you've got a property that isn't fully stabilized, you’re looking at 9.00% to 12.75%.
It sounds high. It is high. But for many, it’s the only way to close a deal while waiting for the permanent financing window to open later.
What No One Tells You About the "Spread"
Most borrowers obsess over the index (like SOFR or Treasuries), but the spread is where the deal lives or dies. In 2026, we’re seeing "risk premiums" adjust based on geography.
The Midwest is actually outperforming the Sunbelt in terms of lender confidence. Cities like Chicago and Indianapolis are seeing rent growth that makes lenders feel warm and fuzzy. Meanwhile, in places like Austin or Miami, where there’s a massive supply of new units hitting the market, lenders are hiking spreads to protect themselves from falling rents.
Key Factors Impacting Your Rate Today:
- LTV (Loan-to-Value): If you want the lowest rates, you need to keep LTV under 65%.
- Recourse: Non-recourse debt (where you aren't personally liable) will always cost you an extra 25 to 50 basis points.
- The "Relationship" Factor: Local banks are currently more aggressive than national ones. They want your deposits, and they’ll often shave 0.25% off a rate to get them.
The 2026 Maturity Crisis
We have to talk about the elephant in the room. The $1.8 trillion in maturing loans I mentioned? A lot of those were written in 2021 at 3.5%. Refinancing that debt at 6.5% is a nightmare for cash flow.
This is creating a "1031 Exchange Tsunami." Owners who can't afford to refinance are selling, which is finally bringing some much-needed inventory to the market. For buyers with cash, this is actually a great time to buy—if you can stomach the debt service.
Practical Steps for Borrowers Right Now
Don't just take the first quote you get. The variance between a life insurance company, a CMBS lender, and a local credit union is wider than I’ve ever seen it.
1. Fix your DSCR before applying.
Lenders in 2026 are looking for a 1.25x to 1.35x coverage. If your property is lean, consider a smaller loan amount to get a better rate. A lower LTV almost always triggers a lower rate tier.
2. Look into the SBA 504 program.
If you occupy at least 51% of your building, this is the "cheat code" of 2026. Fixed rates in the high 5% range for 25 years are still possible here, while conventional loans are stuck in the 6s and 7s.
3. Lock your rate early.
With the political uncertainty surrounding the new Fed Chair appointment in May, volatility is expected to spike. If you see a rate you can live with, pay the fee to lock it.
4. Consider the "Date the Rate, Marry the Price" strategy.
Prices are finally stabilizing because sellers have realized the "easy money" era is over. It’s better to buy a great asset at a fair price with a 6.5% loan than to wait for 5% and watch the price jump 15% because of increased competition.
The bottom line is that average commercial real estate loan rates aren't going back to the floor. Success in this market is about finding the gap between what the "average" says and what your specific property can prove to a cautious lender. Stay aggressive with your shopping, but realistic with your pro-formas.
Determine your maximum comfortable debt service today by running your numbers at a 7% interest rate; if the deal still makes sense there, you have enough of a cushion to survive any 2026 volatility. Reach out to at least three different types of lenders—a local bank, a national agency, and a debt broker—to see the full spectrum of available spreads before signing any term sheet.