Look, “the rate” is not a number
Borrowers call me asking what the rate is. Like it’s one number. Like I have a sheet on my desk that says “today the rate is 6.85%.” It does not work that way, and it never has. Every commercial mortgage rate is built. Index plus spread, plus a bunch of underwriting adjustments that nobody puts on the rate sheet but everybody applies anyway. If you do not understand how the rate gets built, you are going to overpay. Period.
So this is the 2026 rates guide. Where rates are sitting right now, how lenders are actually constructing them, and the handful of things a borrower can do that actually move pricing. Not the things people think move pricing. The things that move pricing.
Where we are in April 2026
Conventional bank and credit union financing for stabilized commercial real estate is roughly 5.0% to 8.75%, depending on the asset, leverage, sponsor, and market. Bridge debt and hard money is 8% to north of 12%. The SBA 504 first trust deed is still one of the prettiest financing options on the planet for owner-occupied, if you qualify. Agency multifamily through Fannie and Freddie is printing the tightest spreads available to anyone who is not the federal government.
The Fed paused in January 2026 at 3.50% to 3.75% after three cuts in late 2025. First pause. Powell basically said we are watching and waiting, and we are in no rush. The 10-year Treasury has been hanging out around 4.25%, which is the reason long-term fixed-rate money has not come down as fast as people expected. Short end down, long end stuck. That is the curve we are in.
Net net. The market is way better than it was in 2023 and 2024. But it is not 2020 either, and it is not coming back to 2020. Lenders are picking and choosing again. Marginal deals do not get done in 2026. Strong deals get done at decent prices. Plan accordingly.
How the rate actually gets built
Two pieces. Index plus spread. That is the whole game.
The index part
The index is the lender’s cost of money, expressed as a public benchmark that everybody can see. In commercial real estate three indexes do basically all the work.
SOFR runs the floating rate world. Bank loans, bridge debt, CMBS floaters, most construction money. LIBOR is gone, has been gone for a while now, and good riddance. Treasury yields run the fixed-rate world. Mostly the 5 year, 7 year, 10 year depending on what you are matching. Life companies, agency, CMBS conduit all price off Treasuries. Then you have FHLB advance rates and prime which still drive a lot of community bank pricing especially on small balance deals.
When a lender quotes you “SOFR plus 250” or “the 10 year plus 175,” that second number is the spread. The first number is the index. The index is what it is. Nobody at the lender controls it. It moves every day with the bond market.
The spread part
The spread is where the lender expresses everything they think about you, your asset, your sponsor strength, your business plan, the hold period, the leverage, and frankly whether they like the deal or not. Spreads are personal. The same exact 10 year Treasury, the same exact day, the same exact lender, two different deals — totally different spreads. Class A multifamily in West LA at 60% LTV with a sponsor the lender already knows is going to clear at one number. A value-add retail center in a tertiary market at 75% with a first time sponsor is going to clear at a totally different number. Same Treasury.
Spreads have come in from the 2023 highs. But not all the way. Lenders got burned in the regional bank stress and they did not forget. Discipline stuck.
The five things that actually drive your spread
Asset class
Asset class does the most work. Multifamily through agency is the tightest pricing on earth that is not a Treasury. Industrial, well leased office in good submarkets, grocery anchored retail follow. Hospitality, self storage, specialty stuff prices wider. Distressed or transitional office is in many cases just not financeable in 2026 through traditional channels. I am not being cute about that. Some assets you cannot finance right now no matter what spread you would pay.
Leverage
Leverage is the second biggest lever. Same property at 55% LTV and at 75% LTV gets totally different spreads from the exact same lender. And here is the thing nobody tells you — its not a smooth curve. There are breakpoints. Usually 60%, 65%, 70%. At each breakpoint the spread jumps. If you can structure your ask to land just under a breakpoint instead of just over you can sometimes pick up 25 to 50 bps for nothing. This is the kind of thing brokers do for a living.
DSCR and debt yield
Debt service coverage ratio and increasingly debt yield is how the lender measures cushion. DSCR under 1.25x in 2026 is going to get you either a worse rate or a no on most permanent debt. Debt yield under 8% is similarly hard to clear at life companies and at agency. These are not negotiable underwriting points. They are the math of whether your deal works.
Sponsor strength
Sponsor strength sits behind every quote even when nobody talks about it. Net worth, liquidity, real estate experience, history with the lender. Repeat sponsors with relationships routinely pick up 25 to 50 bps over comparable first time borrowers on the exact same deal. Not because anyone is being unfair. Because the lender already knows them and knows the deal is going to close and the loan is going to perform. That has value and it is priced in.
Term and structure
Term length, IO period, full am vs balloon, prepay structure. All of it affects price. A 10 year fixed with 5 years IO at 65% LTV is a different loan than a 7 year fixed fully amortizing at the same leverage on the same building. Different price.
What loans look like right now
Banks and credit unions
Floating rate is roughly SOFR plus 200 to 325 bps. Fixed rate at 5 years and 7 years is the matching Treasury plus 200 to 275 bps. Leverage usually 65% to 75%. Some banks come in tighter on stuff they really like. Some banks that got their hands burned are way out at 350+ on anything. Picking the right bank for your deal is half the job.
SBA 504 and SBA 7(a)
SBA 504 for owner-occupied is still one of the best long term fixed rate products in the entire commercial real estate financing universe if your business qualifies. CDC second trust deed prices off Treasuries at very modest spreads. The first trust deed bank loan piece prices like a normal bank loan but with the SBA cushion behind it which helps a lot of lenders get there. SBA 7(a) is floating, prime plus a spread, with caps the SBA sets.
Agency multifamily
Fannie DUS and Freddie Optigo are the tightest pricing in the private commercial debt markets. 10 year Treasury plus 130 to 200 bps depending on the program, asset, leverage. If you have a multifamily deal that qualifies for agency you should be looking hard at agency. Almost nothing competes with it.
CMBS
CMBS reopened in 2026 after a few quiet years and it is competitive again. 10 year fixed rate non-recourse on stabilized assets in primary markets at Treasury plus 200 to 275. CMBS is not for every deal but for the deals it fits it can be the right answer.
Bridge
Bridge debt is SOFR plus 350 to 600 bps and up depending on the business plan and the asset. Bridge is what you take when you have a real plan to stabilize the asset and refinance into permanent in 18 to 36 months. Bridge is not what you take because you could not get a permanent loan. Those are different problems.
Hard money and private capital
9% to 12% plus. Time sensitive transactions. Assets that cannot clear conventional underwriting. Nothing wrong with hard money for the right deal. A lot wrong with hard money for the wrong deal.
What you can actually control
You cannot control SOFR. You cannot control the 10 year. Nobody can. But you can control everything that touches the spread and most borrowers do not.
Lower the leverage ask if you can. Three to five points lower can step you under a breakpoint and that is real money. Get your financials clean before you go to market not while you are at market. Run a competitive process — three to five qualified lenders quoting against each other does more for your spread than any single negotiation will. Match the loan structure to the actual business plan. If you are going to sell in three years stop trying to lock 10 year fixed. If you are holding for 15 years stop trying to be cute with floating rate.
And work the timing. A 25 bps move in the 10 year Treasury between term sheet and rate lock is the difference between a fine outcome and a great one. This is part of what we do at Financial Compound every day. Watch the curve. Lock when the data says lock.
One quick story
I had a borrower last fall who was convinced he needed 75% LTV on a small office refi. Convinced. Would not budge. We ran the deal at 75% and it came back at SOFR plus 350 from the best lender we could get to the table. I asked him to let me re-run it at 65%. Same lender came back at SOFR plus 215. Same lender, same building, same week. 135 bps of pricing for 10 points of leverage that he did not actually need based on his cash position. He took the 65% deal. He still talks about it. This is what a constructed rate looks like in real life.
Bottom line
Rates in 2026 reward borrowers who prepare. They punish borrowers who improvise. The market is open and capital is flowing but the spread between a well structured deal and a hastily packaged one is now hundreds of thousands of dollars over the life of the loan. The job of a borrower-side broker is to do that structuring work for you. Know which lenders are pricing aggressively in your asset class this week. Know where the spread breakpoints sit. Package the file so the lenders underwriting machine returns its best possible answer.
That is the whole job. And in 2026 its more valuable than it has been in a long time.
Michael Schwartz is the founder of Financial Compound, a borrower-side commercial mortgage brokerage based in Santa Monica. To talk through your deal call +1-310-260-5900 ext. 3 or reach out through the contact page.