CREFC’s 1Q 2026 BOG Sentiment Index Falls 20% to Baseline as Geopolitical Shock Reverses Three Quarters of Gains
April 20, 2026
NEW YORK, NY – April 20, 2026 – The CRE Finance Council (CREFC), the trade association for the commercial real estate finance industry, today released its First-Quarter 2026 (1Q26) Board of Governors (BOG) Sentiment Index survey results.
The index fell 20.2% to 100.1 from 125.4 in 4Q25, essentially returning to the survey’s 4Q17 baseline of 100.0 and erasing gains accumulated over the prior three quarters. The decline was broad-based, with all nine core questions deteriorating quarter-over-quarter. The sharpest pullbacks came from views on rates, overall industry sentiment, liquidity, and the economic outlook.
Conducted from April 7–13, 2026, the survey captured a sharp shift in sentiment driven by the onset of the Iran war and its cascading effects on interest rates, transaction pace, and the macroeconomic outlook. The survey consists of nine core questions and additional topical questions, which are not factored into the BOG Index. Ninety-one percent of the BOG responded to the 1Q26 survey.
Demand-side readings held up better than the rates and macro questions, even as they moderated from 4Q25 highs. Forty-one percent of respondents still expect improving CRE fundamentals over the next 12 months, 61% expect stronger investor demand for CRE and multifamily assets, and 71% expect higher borrower demand for financing — suggesting underlying market activity remains intact even as confidence in the macro backdrop has deteriorated significantly.
Key Highlights from 1Q26 Index Core Questions:
- Economic Outlook: Economic sentiment reversed sharply. A majority of respondents (54%) now expect the U.S. economy to perform worse over the next 12 months, up from just 14% in 4Q25, while only 12% expect improvement (34% no change).
- Federal Policy: Policy expectations cooled from 4Q25’s highs. Nearly half (49%) expect a neutral impact from federal legislative and regulatory actions, while 29% expect a positive impact and 22% expect a negative impact — a significant shift from 4Q25, when 60% expected positive effects and only 6% expected adverse ones.
- Interest Rate Impact: The rates question posted the sharpest pullback of any core question. Only 7% expect rates to have a positive impact on CRE finance businesses, while 46% are neutral and 46% negative — a dramatic reversal from 4Q25, when 69% reported a positive impact and 0% reported a negative one.
- CRE Fundamentals: Expectations weakened from 4Q25 but remained net positive. Forty-one percent expect improving fundamentals (occupancy, rents, NOI) — down from 51% in 4Q25 — while 37% expect no change and 22% expect deterioration.
- Transaction Activity: Investor demand expectations moderated but remain positive. Sixty-one percent expect increased demand for CRE and multifamily assets over the next 12 months (29% no change; 10% less demand), down from 74% in 4Q25.
- Financing Demand: Borrower demand remains the strongest core reading despite pulling back from 4Q25’s survey-record 97%. Seventy-one percent still expect increased borrower demand for CRE and multifamily financing (27% no change; 2% less), reflecting continued refinancing needs and acquisition activity.
- Market Liquidity: Liquidity expectations weakened materially. A majority (58%) expect no change, while 23% expect worse conditions and only 20% expect improvement — a sharp reversal from 4Q25, when 69% expected better liquidity.
- CMBS and CRE CLO Outlook: Views on CMBS and CRE CLO demand and spreads softened. Half (50%) expect a neutral impact, 33% expect a positive impact, and 18% expect a negative impact, down from 71% positive in 4Q25.
- Overall Industry Sentiment: Reset to neutral. A majority (51%) hold a neutral outlook for CRE finance businesses, while 27% are positive and 22% are negative — compared to 4Q25, when 74% were positive and 0% were negative.
Additional Topical Insights:
The survey’s topical questions point to a market focused on financing conditions, refinancing risk, and selectivity rather than a wholesale shutdown in activity.
Asked about the most likely impact of the Iran war on CRE finance over the next six months, 61% said it would keep borrowing costs elevated by pushing out rate relief, while 20% said it would freeze transaction and investment activity as investors wait for clarity. Twelve percent expect it to weaken property-level fundamentals through slower economic growth, and only 7% believe it will have no meaningful lasting effect on CRE markets.
On refinancing risk, respondents overwhelmingly pointed to secondary and lower-quality office loans as the borrower cohort facing the greatest risk over the next 12 months (56%), followed by transitional assets that have not yet stabilized (32%), multifamily loans in supply-heavy markets (7%), and hotel loans with high leverage or weaker sponsorship (5%).
Expectations for distressed office CMBS resolutions were notably dispersed, underscoring uncertainty around workout timing. Twenty-seven percent expect no near-term resolution, with loans remaining in special servicing, while foreclosure and liquidation (24%), discounted payoffs and note sales (24%), and modifications and extensions (24%) each drew roughly equal shares. The even distribution suggests the industry does not yet see a dominant workout strategy emerging for office distress.
Banks are expected to be the most active source of new CRE lending over the next 12 months, cited by 46% of respondents, followed by private credit and debt funds (34%). Securitized lenders (including CMBS, CRE CLO, and agency multifamily) and life insurance companies each drew 10%.
On new construction, the survey points to continued discipline rather than a broad rebound. Seventy percent expect selective development concentrated in the highest conviction sectors and markets, while 23% expect a modest slowdown, with most viable projects still moving forward. Only 3% expect a significant pullback — signaling that while development is becoming more targeted, the pipeline is not shutting down.
Open-ended commentary reinforced these themes. Compared with 4Q25’s emphasis on bifurcation between stronger and weaker assets, this quarter’s comments centered more on geopolitical shock, rate volatility, transaction delays, structural refinancing risk, and the growing importance of surveillance, servicing quality, and price discovery. Several respondents warned of downside asymmetry — noting that even a modest contraction in liquidity and velocity could, under the wrong conditions, become self-reinforcing.
Lisa Pendergast, President and CEO of CREFC, commented:
About CREFC and the Board of Governors Sentiment Index:
The CRE Finance Council (CREFC) is the trade association for the over $6 trillion commercial real estate finance industry with a membership that includes more than 400 companies and 19,000 individuals. For over 30 years, CREFC has promoted liquidity, transparency, and efficiency in the commercial real estate finance markets, and acted as a legislative and regulatory advocate for the industry, playing a vital role in setting market standards and best practices, and providing education for market participants.
CREFC’s Board of Governors consists of senior executives representing every sector of the commercial real estate lending and mortgage-related debt investing markets, including balance-sheet and securitized lenders, loan and bond investors, mortgage bankers, private equity firms, loan servicers, rating agencies, attorneys, accountants, and others.
CREFC’s BOG Sentiment Index, launched in 2017, tracks quarterly shifts in commercial real estate finance sentiment through nine equally weighted core questions, supplemented by topical questions that are not factored into the index. The 1Q26 survey achieved a 91% response rate with 41 of 45 BOG members participating.
For more information about the 1Q26 BOG Sentiment Index and the full survey results, please click here or contact Raj Aidasani at raidasani@crefc.org.
Media Contact:
Mary Beth Ryan
Senior Director, Communications
646-884-7567
mryan@crefc.org
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2026 CRE Finance Council. All rights reserved.