Market Momentum & Lending Trends: What Investors Should Know
By Dillon Freeman, Senior Loan Officer, Fidelity Bancorp Funding
At Fidelity Bancorp Funding, 2025 has been a year of strong momentum. By the end of Q2, our direct bridge fund had already surpassed its total 2024 origination volume. The question is whether the growth is the result of refined execution or the market shifting in our favor?
Recent data from CBRE suggests it’s a bit of both. Their Lending Momentum Index rose 45% year-over-year in Q2, reflecting increased financing activity across the board, despite a modest pullback tied to tariff uncertainty.
Alternative Lenders Lead the Way
CBRE reports that alternative lenders were the top non-agency capital source in Q2, accounting for 34% of loan closings. Banks followed at 24% and life companies at 23%. This aligns with our experience that investors are seeking flexible and creative financing structures outside traditional channels.
Key Stats for Multifamily Investors
Spreads Tightening: Multifamily spreads over the 10-year Treasury have compressed to ~150 bps, among the lowest levels in the past 15 years.
Debt Yield Benchmarks: An average loan constant of 6.7% implies an 8.04% required debt yield at a 1.20x DSCR, a valuable reference point for value-add underwriting.
Balancing Optimism with Caution
While origination momentum is encouraging, delinquencies remain on the rise across asset types and lender categories. The looming “maturity wall” and shifting rate environment raise the possibility of a default wave.
For investors, today’s market offers opportunity for those who can move quickly and strategically, especially on sub-$10 million multifamily deals, while staying alert to credit risk ahead.
