Home Insights Real estate 2Q25 senior loan officer survey points to resilience in CRE debt
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The Federal Reserve released its 2Q25 Senior Loan Officer Opinion Survey yesterday, showing a slight tightening in lending standards and weaker loan demand overall. While large banks reported some easing in standards and improved demand for CRE loans, smaller banks continued to tighten standards and saw declining demand across all major CRE loan types. Lending standards remain significantly looser, and demand is much improved from a year ago—indeed, we previously reported that CRE loan originations increased 66% year-over-year.

Lending standards edged tighter quarter over quarter, with the average net share of banks tightening standards rising by 0.8 percentage points to 8.7%:

  • Construction & Land Development: 9.7% of respondents net tightened standards, down from 11.1% in 1Q25.
  • Core Commercial: 11.5% net tightened, up from 10.9% last quarter.
  • Multifamily: 4.8% net tightened, rising from 1.6%.

Loan demand weakened further, with the average net share reporting weaker demand falling by 5.5 percentage points to -8.7%:

  • Construction & Land Development: -11.3%, down from -6.3%.
  • Core Commercial: -11.5%, down from -1.6%.
  • Multifamily: -3.2%, down from -1.6%.

Our takeaway

Despite turbulence in 2Q25, these results are a relative positive for the CRE debt market, especially the improving conditions among large banks. Looking ahead, we see potential for continued improvement in 3Q25. The CRE Finance Council’s sentiment index, a reliable leading indicator in our view, surged 27.8% to 112.3—one of its strongest quarterly gains on record and a clear return to positive sentiment. We remain confident that open and liquid CRE debt markets can support unlevered total returns of around ±5% in 2025.

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