The commercial market has entered a more liquid phase. Are your operations ready to grow?
For the better part of three years, the commercial real estate market has been grinding through a difficult adjustment. The Federal Reserve's rate hikes beginning in 2022 squeezed property values, strained debt service, and left a growing pile of loans that didn't quite work at current rates. Rather than force the issue, many lenders extended maturities and waited, known as "extend and pretend."
That patience is running out. According to an analysis of Mortgage Bankers Association (MBA) data, extensions dropped from $384 billion in 2024 to $200 billion in 2025, falling from 41% of expected maturities to just 21%. The volume of debt coming due this year is still large, at roughly $875 billion, but it is no longer growing.
In addition, commercial and multifamily mortgage originations surged 52% year-over-year in Q1 2026, according to the MBA.
Xander Snyder, senior commercial real estate economist at First American, has been tracking those numbers closely. He said the era of "extend and pretend" is giving way to "resolve or reset."
He believes this change represents a genuine opening for commercial mortgage brokers. More distress resolution, he said, means more events needing financing and more work for brokers.
"We've essentially entered a more liquid phase of the cycle," Snyder told Mortgage Professional America. "There's a greater number of transactions, sales, refinances, but also distress. There's still a fair amount of distress out in the market, and more of that distress is now being forced toward some sort of a conclusion."
Extensions fall, capital follows
With fewer loans being rolled forward, Snyder said banks in particular have been reaching the point where carrying troubled positions no longer makes sense.
"When capital is tied up in underperforming loans, which has been the case when extend and pretend has been more prevalent over the last several years, then that capital can't be lent out to new, more promising projects that might intrinsically create more economic value," he said. "Banks are now eager to move on from the handful of troubled loans that at this point they know don't really have a future."
The Mortgage Bankers Association's Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations backs that up. Reggie Booker, MBA's associate vice president of commercial research, said the most significant move in Q1 2026 was depository lending.
"The most notable increase was the 80% rise in depository lending, driven in part by the large volume of bank-held loans maturing this year and the need to refinance those positions," Booker said.
Beyond the rate
Snyder said the net effect of falling extensions is more liquidity and more transactions for brokers to work on. He said the brokers who come out ahead in this environment won't just be the ones who find the lowest rate.
"These deals will increasingly be won by brokers who are able to go beyond just finding the best rate, but can offer solutions to different parties that find themselves in challenging situations," he said.
Snyder said that dynamic is playing out in how capital is moving across the stack.
"I think you're going to get more investor lenders playing more actively in some of the more junior roles of the capital structure," he said.
Snyder also noted that what's good for market liquidity isn't always good for the individual property owner.
"You can have increasing market liquidity that's driven by growing distress resolutions, which implies that owners of buildings have lost their entire position," he said. "If a property falls 30% in value and the LTV was 70%, the lenders are going to recover most of the value in the loan, and there will be a mortgage broker who will be able to replace the debt whenever that property trades."
With commercial mortgage delinquencies continuing to climb in Q1 2026, that pipeline of workouts isn't thinning out anytime soon. Snyder's advice to brokers is to get their options in order now.
"The most important thing a broker could do right now, aside from being prepared for a greater volume of business so they're not losing out on opportunity when opportunity shows up, is knowing which types of lenders are willing to be active in different asset classes and also different types of transactions," he said.
"Having access to different types of capital, whether it's junior debt, whether it's mezz or preferred equity – if a mortgage broker has access to all of these different options and they can say I can combine these two things and solve this person's problem, they're going to win the business."
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