Sorting Itself Out – Sept. 28, 2026
Lender sentiment has done an about-face in key areas compared to six months ago
Commercial real estate lending does not operate in a vacuum, because market conditions do not. The same lending sources may present different faces to the world than they did six or nine months earlier. As a case in point, Slatt Capital’s just-released fourth biannual Lender Sentiment Survey finds survey respondents focused on challenges that weren’t as important in early 2026.
“Six months ago, lenders told us their biggest problem was each other,” Slatt reported. “Competition was the leading headwind for nearly half of respondents, two-thirds expected the 10-year Treasury to finish 2026 at or below 4.25%, and three-quarters planned to grow allocations. September’s survey shows how quickly that changed.”
Rather than Lender A worrying about Lender B grabbing business away, both A and B—and C and D, for that matter—are confronting a common enemy: interest rates. In the latest survey, rates returned as the top headwind for 44% of respondents, up from 10% six months ago, while competition fell from 47% to 20%. The Federal Reserve’s recent vote for a quarter-point increase in the federal funds rate, while not reflected in this survey, could hardly have been reassuring for respondents.
Don’t mistake identifying a common threat for presenting a united front, though. “The September 2026 results show a market sorting itself by capital source,” according to Slatt. Banks and life companies are far more concerned than debt funds or credit unions about interest rates. It’s especially lopsided between life companies, 62% of which cite interest rates as their main concern, and debt funds at 14%.
On the subject of lopsided responses, compare the change in outlook for the 10-year Treasury. In February, 68% of lenders expected the 10-year to end 2026 at or below 4.25%. This month, just 1% hold that view, while 77% think we’ll see 10-year rates at 4.75% or higher as 2026 ends.
The new expectations for 10-year Treasury rates should be factored into borrowers’ expectations for loan terms. “Underwriting built on a sub-4.25% year-end is being rewritten, and borrowers should expect proceeds and pricing to reflect it,” Slatt advised.
Over the past couple of years, it has become almost an article of faith that commercial real estate debt has become more plentiful. That may be due to more lenders getting into the game rather than the purse strings being loosened. In fact, a look at the survey results suggests the opposite may be true.
When Slatt surveyed lenders in February 2026, 71% of respondents said they expected to increase their CRE allocations compared to a year earlier. In the latest survey, that response has fallen to 50%, with the delta especially wide among debt funds. While still in the minority, the share of respondents who expect to decrease their allocations is the largest (9%) since Slatt began conducting the survey.
On the other hand, the survey presents some encouraging news for borrowers looking to finance or refinance office properties. Office is still considered the least competitive property type among lenders, yet the percentage of respondents holding that view has dropped from 61% in February 2025 to 46% today. Meanwhile, multifamily’s lead as the most competitive property type is the narrowest to date.
“This is not a market in retreat,” Slatt reported. “It is a market sorting itself. Rate pressure returned, but it landed unevenly, and the lenders most exposed to it are also the ones still planning to grow. The capital source now matters as much as the deal.” Whether you’re a borrower, a lender or an investor, the sorting process bears watching, and acting upon accordingly.