Friday, 25 September 2026
Sentiment across Germany’s commercial real estate lending market improved substantially during the third quarter of 2026, with more financial institutions reporting growth in new business and fewer experiencing worsening financing conditions. The BF.Quartalsbarometer increased to -12.30 points from -25.97 in the previous quarter, although the negative reading shows that lenders remain cautious about the overall market.
New lending provided one of the clearest signs of improvement. Around 35% of respondents said their volume of newly issued property loans had increased during the quarter, up from 23% in Q2. None of the lenders surveyed reported a decrease, compared with 23% three months earlier, while the remainder experienced broadly stable activity.
The financing environment also became more predictable. Only 15% of respondents reported less favourable conditions than in the previous quarter, a significant reduction from 46% in Q2. Around 80% said conditions had remained broadly unchanged, suggesting that the rapid tightening experienced across the property debt market has begun to ease.
Borrowing costs for existing properties showed little movement. Average lending margins stood at 156 basis points, two basis points below the previous quarter. Residential property remained the least expensive sector to finance, with an average margin of 120 basis points, while supermarkets averaged 170 basis points. Loan-to-value ratios were broadly unchanged at 64.5%.
Financing new development remained considerably more expensive. Average margins increased by around four basis points to 273 basis points. Office developments carried the highest average margin at 309 basis points, compared with 210 basis points for logistics projects. Average loan-to-cost ratios edged upwards to 67.9%, indicating a modest increase in the proportion of development expenditure lenders are prepared to finance.
There were also tentative signs of stabilisation in troubled property loans. Some 25% of respondents reported an increase in non-performing loans during the previous three months, down from 31% in Q2. Half experienced no significant change, while 15% reported a reduction. The figures suggest that pressure on lenders’ existing property portfolios remains present but is no longer increasing as broadly as earlier in the year.
Expectations for longer-term borrowing costs remain less favourable. Around 75% of the specialists surveyed expect rates on property loans fixed for ten years to be higher by the end of 2026, compared with 69% in the previous quarter. The outlook indicates that investors and developers may have to adapt to structurally higher financing costs even as access to debt gradually improves.
The latest survey therefore points to a German real estate debt market moving away from its weakest conditions without returning to the financing environment that existed before the rise in interest rates. Greater willingness among lenders to originate new loans could support investment transactions and development, but differences between sectors remain pronounced, with logistics development attracting significantly lower margins than offices.
The BF.Quartalsbarometer is prepared by the Handelsblatt Research Institute for real estate finance specialist BF.direkt. The Q3 2026 survey covered 38 professionals directly involved in approving property loans at banks and other financing institutions.
