Commercial Mortgage Loan Rates

Current commercial mortgage interest rate chart including SOFR, Treasury, SWAP, Prime Rate and the waning LIBOR index. If you are currently looking for a commercial property loan or loan to refinance your property please contact us.  (Please wait for form to load…)

Commercial mortgage rates in 2026 are a function of three things working together: the index a lender prices off of, the spread the lender charges over that index, and the borrower- and property-level credit factors that move the spread up or down. Financial Compound publishes this rates page as a working reference for borrowers underwriting acquisitions, refinances, and recapitalizations across every major commercial property type.

What follows is a structured walk-through of the indices that drive commercial mortgage interest rates, current spread context by asset class, and the underwriting constraints (DSCR, LTV, debt yield) that determine where any individual loan prices within the range.

How Commercial Mortgage Rates Are Built: Index + Spread

Every commercial mortgage rate is the sum of an index and a spread. When a lender quotes “all-in” without breaking it apart, the components are still there. Understanding which index a loan prices off of — and why a particular spread is being charged over it — is the difference between accepting a quoted rate and structuring a transaction.

The Indices That Matter in 2026

SOFR replaced LIBOR as the dominant floating-rate benchmark for U.S. dollar commercial loans following the LIBOR phase-out completed in mid-2023. Term SOFR — administered by CME Group — is now the standard for cash market loans, with 1-month and 3-month tenors representing the bulk of activity. Compounded SOFR averages (30-, 90-, 180-day) are also used, particularly in agency multifamily.

Why Spreads Move

The spread a lender charges over the index reflects four overlapping factors:

1. Capital provider type. Life companies have the lowest cost of capital and the tightest spreads on stabilized institutional assets; debt funds price wider but underwrite story credit and transitional cash flow that life companies will not touch.
2. Asset class risk. Class-A multifamily in primary markets prices inside Class-B office or limited-service hospitality, sometimes by 200 basis points or more for the same leverage.
3. Credit constraints. Lower DSCR, higher LTV, or tighter debt yield all push spreads wider. The same property at 55% LTV versus 70% LTV can see a 50–100 bps spread differential.
4. Capital markets sentiment. CMBS spreads widen when AAA bond demand softens; bank spreads widen when regional banks pull back from CRE; debt-fund spreads compress when private equity capital is competing for the same deal flow.

Current Commercial Mortgage Rates by Asset Class

The table below summarizes indicative all-in rate ranges by asset class and capital provider for stabilized, institutional-quality properties at moderate leverage in late April 2026. Spreads compress for sponsors with strong track records, low leverage, and prime markets; they widen for transitional cash flow, secondary markets, and tighter coverage.

Ranges above assume moderate leverage (60–70% LTV for permanent debt, lower for hospitality and office), institutional sponsorship, and stabilized cash flow. Lower leverage and stronger sponsorship tighten spreads materially; higher leverage and transitional cash flow widen them.

Underwriting Constraints That Move Rate

Three credit metrics determine where a specific loan prices within the asset-class range above. A skilled commercial mortgage broker structures the transaction to optimize across all three rather than pushing maximum proceeds on any single one.

Debt Service Coverage Ratio (DSCR)

DSCR measures net operating income relative to annual debt service. Most permanent commercial lenders require a minimum DSCR of 1.20x to 1.30x for stabilized properties; agency multifamily can underwrite to 1.25x at maximum leverage, while life companies on Class-A office often require 1.40x or higher. The higher the DSCR cushion above the minimum, the more pricing flexibility the lender has — and the better positioned the borrower is to negotiate spread.

Loan-to-Value (LTV)

LTV constrains proceeds based on appraised value. Maximum LTVs in 2026 sit around 75–80% for stabilized multifamily, 65–70% for industrial and retail, 55–65% for office and hospitality, and 95% of all-in cost (with structure) for select land transactions. Cap rate compression or expansion at the time of refinance directly affects whether a property can support its existing debt at maturity.

Debt Yield

Debt yield is net operating income divided by loan amount, expressed as a percentage. CMBS lenders in particular have anchored to debt yield as the dominant constraint, with 8–10% minimums standard for most asset classes and 10–12% on more transitional cash flow. Debt yield is inherently leverage-aware in a way DSCR is not — it cannot be gamed by a low interest rate, which is why CMBS shops gravitated to it after the 2008 cycle.

Fixed vs. Floating: Swap Conversion and Hedging

Many borrowers begin a financing process focused on fixed-rate certainty and finish it carrying a floating-rate loan with a swap or rate cap, because the all-in cost was lower. The math depends on the swap curve.

A borrower can take a SOFR-indexed floating-rate loan and convert exposure to fixed by entering a SOFR swap with the lender or a swap counterparty. The current 5-year SOFR swap rate sits around 3.95%; the 10-year swap rate around 4.10%. Adding the loan spread to the swap rate produces the all-in fixed equivalent. When the swap curve sits below the corresponding Treasury yield — as it has for parts of 2026 — borrowers can sometimes achieve a lower effective fixed rate through the floating-plus-swap structure than through a direct fixed-rate loan.

The trade-off is breakage cost. Swap mark-to-market values fluctuate with rates, and breaking a swap before maturity can produce a payment in either direction. Yield maintenance and defeasance, the prepayment structures common on CMBS and life company permanent debt, behave differently — and understanding the prepayment math at origination is what separates a structured loan from a quoted rate.

Prepayment Structures and Their Cost

The prepayment penalty is part of the rate. A borrower comparing two term sheets at the same all-in rate is rarely comparing equivalent loans if one is yield maintenance and the other is a step-down.

• Yield maintenance. Standard on life company permanent debt and some CMBS. The borrower pays the lender the difference between the loan’s note rate and the current Treasury yield for the remaining term, present-valued. In a falling-rate environment, yield maintenance is expensive.
• Defeasance. Standard on CMBS. The borrower substitutes a portfolio of Treasury securities into the loan in place of the property collateral, with the securities timed to match the remaining loan payments. Mechanically complex and costly in falling-rate environments.
• Step-down. Common on bank and debt-fund loans. A declining schedule (e.g., 5-4-3-2-1% of loan balance) over the prepay-protected period.
• Open prepay after lockout. Common on bridge and value-add bank loans — typically 12–24 months locked, then open at par with no penalty.
• SBA 504 prepay. Declining schedule over 10 years on the debenture, then open. SBA 7(a) is more flexible.

Recourse vs. Non-Recourse Pricing

Recourse loans — where the borrower or sponsor is personally liable beyond the property collateral — typically price 25 to 75 basis points inside non-recourse equivalents because the lender’s downside is reduced. Bank loans are predominantly recourse; CMBS, life company, and agency multifamily are predominantly non-recourse with standard “bad-boy” carve-outs (springing recourse for fraud, bankruptcy, environmental, etc.).

Whether to accept recourse to lower the rate is a balance-sheet question, not just a pricing question. Sponsors with multiple properties and net worth concentration in real estate often prefer to pay 50 bps for non-recourse to ringfence each asset. Single-property owner-operators with lower net worth often have no choice and accept recourse as the cost of capital access.

Frequently Asked Questions

Q: Are commercial mortgage rates higher or lower than residential rates right now?

A: In April 2026, commercial mortgage rates for stabilized institutional assets are running roughly comparable to residential 30-year fixed rates, with significant spread depending on asset class. Class-A multifamily and industrial price in line with or slightly below residential, while office, hospitality, and bridge debt price meaningfully wider. The structures are very different, however — commercial loans are typically 5- to 10-year terms with balloon balances and recourse / prepay structures that residential loans don’t carry.

Q: How is SOFR different from LIBOR for commercial mortgage purposes?

A: SOFR is a transaction-based rate derived from actual overnight repo activity in U.S. Treasury markets, while LIBOR was a survey-based rate. SOFR replaced LIBOR for U.S. dollar commercial loans as of mid-2023. For most borrowers, the practical difference is modest: spread structures have re-equilibrated around SOFR, and Term SOFR (1-month and 3-month) functions much like 1-month and 3-month LIBOR did. The bigger shift was structural — SOFR has no credit-risk component, where LIBOR did, so spreads have widened to compensate.

Q: Why is my quoted rate higher than the ranges shown in your table?

A: The ranges in the table are indicative for stabilized, institutional-quality assets at moderate leverage with strong sponsorship. Pricing widens for any of: secondary or tertiary markets, transitional cash flow, higher leverage, weaker sponsorship, smaller loan size, shorter remaining lease term on a single-tenant asset, or specialty property types. A skilled commercial mortgage broker can often improve a quoted rate by structuring the transaction differently or by running a competitive process across multiple capital sources.

Q: When should I lock my rate?

A: Rate lock decisions depend on the type of loan, the lender, and the borrower’s view on rates. CMBS and life company loans typically allow rate lock 30–60 days before closing for a fee. Agency multifamily can be locked at application. Bank loans usually lock at commitment. The strategic question is how much spread compression or Treasury rate movement you expect during the closing window — locking early eliminates the upside of a rally but protects against a sell-off.

Q: What’s the difference between DSCR, LTV, and debt yield as constraints?

A: DSCR is income-based, LTV is value-based, and debt yield is loan-amount-based. In a low-cap-rate environment, LTV produces high proceeds and DSCR is the binding constraint. In a high-cap-rate or compressed-NOI environment, LTV becomes the binding constraint. Debt yield strips out both interest rate and value to produce a leverage-aware metric, which is why CMBS shops favor it. A well-structured loan finds the constraint that’s most generous for the specific property and prices off of it.

Q: Does Financial Compound charge upfront fees?

A: No. Financial Compound does not charge any upfront fees on commercial mortgage transactions. We are compensated only upon closing. That alignment is rare in commercial mortgage brokerage and is one of the reasons capital providers routinely designate Financial Compound as a preferred broker.

Q: What loan amounts does Financial Compound handle?

A: Financial Compound has closed transactions ranging from small-balance loans to single transactions exceeding $74 million, and has financed portfolios well into nine figures. There is no strict floor or ceiling — each opportunity is evaluated on merit and matched to the appropriate capital source.

Q: How fast can a commercial mortgage close?

A: Typical bank and CMBS permanent loans take 45 to 75 days from application to funding. Agency multifamily can be slightly faster. Bridge loans typically close in 30 to 45 days. Hard money loans can close in 2 to 5 business days when the situation demands it. Financial Compound has closed an institutionally priced permanent loan in 8 business days, an industrial building refinance in 19 days, a land loan in 5 days, and hard money loans in 2 business days.

Q: Does running a competitive process actually improve the rate, or is it just optics?

A: It improves the rate, the structure, or both — and often by a meaningful amount. Spreads are not posted prices; they are the result of a lender’s perception of the deal, the competition for it, and the borrower’s leverage in the negotiation. A documented competitive process across capital sources (life company, CMBS, bank, debt fund, agency where applicable) signals to each lender that the deal will price to market. The structural improvements — interest-only periods, prepayment flexibility, recourse carve-outs, escrow structures — often have more long-term value than the spread itself.

Q: What property types does Financial Compound finance?

A: Office, retail, industrial, multifamily, mixed-use, hospitality, self-storage, medical office, special-purpose, land, and a broad range of non-conventional assets. Financial Compound regularly closes transactions on niche property types — bingo parlors, car washes, entertainment centers, gyms, jewelry buildings, supermarkets, and theaters among them — that generalist brokers decline.