CREFC Reports Rise in Sentiment Index Driven by Record Financing Demand in 4Q 2025

CREFC's Sentiment Index Reaches Near Record Levels

The CRE Finance Council (CREFC), a crucial entity in the commercial and multifamily real estate finance sector, recently released findings from its Fourth-Quarter 2025 Board of Governors (BOG) Sentiment Index survey. This edition shows a significant rise in market sentiment, indicating a thriving environment for real estate financing.

Key Findings of the 4Q 2025 Index

The latest index climbed by 2.1% to reach 125.4, getting closer to the all-time record of 126.6 set in 4Q 2024. This marks the third consecutive quarterly increase, suggesting that confidence among market participants is solidifying after fluctuating conditions in the previous years.

Economic Outlook

Among the respondents, 37% expressed optimism regarding the U.S. economy's performance over the next year, which is the highest optimism level since the last quarter of 2024. Conversely, only 14% expect economic deterioration, demonstrating a favorable outlook among the majority.

Federal Policy Sentiment

Participants also showed strengthened confidence in federal policy ramifications. A remarkable 60% foresee positive impacts from the latest legislative and regulatory changes, while only 6% expect any adverse effects. This optimism stems from the expectations of supportive measures bolstering the finance sector.

Impact of Interest Rates

Interest rate perceptions remained steady, with 69% of respondents anticipating favorable impacts from mortgage and cap rates, reflecting a positive shifting perspective despite a slight moderation from previous peaks.

Expectations on CRE Fundamentals

There’s an optimistic shift regarding core commercial real estate fundamentals, with 51% projecting improvements in occupancy, rental rates, and net operating income (NOI). This is an increase from 46% seen in the previous quarter, confirming a broadly positive view of the sector’s health.

Transaction Activity & Financing Demand

CREFC’s survey set a record for financing demand expectations, with 97% of respondents projecting increased borrower demand in the upcoming year. This is a slight rise from last quarter, signaling substantial refinancing and acquisition aspirations amidst looming maturity issues.

Market Liquidity Trends

Confidence in liquidity also improved, as 69% of participants expect better market conditions moving forward. In contrast, only 3% see signs of deterioration, indicating strong resilience within the finance landscape.

Securitized Product Outlook

Expectations for securitized products like CMBS and CRE CLO remained optimistic, with 71% of respondents predicting favorable trends. This sentiment is particularly compelling given the current challenges presented by rising delinquencies in underlying assets.

Challenges Ahead

Despite the positive sentiment, respondents acknowledged ongoing challenges, particularly in relation to credit and asset performance variations. With an estimated $200 billion in private-label CMBS maturing through 2026, expectations suggest a bifurcated outcome; institutional-quality assets are likely to see successful refinancing, while lesser-rated properties may struggle.

As Lisa Pendergast, President and CEO of CREFC noted, "The market has transitioned from recovery to consolidation at high levels. Although there’s a prevailing sense of optimism, access to capital will increasingly depend on asset quality and sponsor strength as we navigate through 2026."

CREFC plays a vital role in representing around 400 companies and 19,000 industry professionals in the commercial real estate space. Through its activities and indices, it continues to offer critical insights into the dynamics of the real estate finance industry. The BOG Sentiment Index remains a crucial tool for gauging sentiment and trends within this expansive market sector.

For comprehensive insights and survey results, please refer to CREFC’s official channel.