U.S. banks appear ready to approve more commercial real estate financing in 2025.

The net percentage of banks reporting tighter loan conditions was almost at zero in the Federal Reserve's latest quarterly survey of senior loan officers. The last time that occurred, in the first quarter of 2021, bank loan demand accelerated initially in multifamily and then a quarter later for nonresidential properties.

The financial industry is looking at this so-called equilibrium as a positive sign after high interest rates have hampered property markets for three years.

Over the fourth quarter, a modest net share of banks reported having tightened standards for construction and land development loans as well as debt secured by nonfarm nonresidential properties, according to the Fed. The percentage for loans secured by multifamily properties with tightened standards remained basically unchanged on a net basis.

At the same time, banks reported weaker demand for construction and land development loans, with demand basically unchanged for both multifamily and commercial property loans.

The survey responses were mixed across bank sizes. A modest net share of large banks reported stronger demand for loans secured by nonfarm nonresidential and multifamily properties.

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