Access to capital in the debt market remains strong. Banks show a high willingness to lend, while competition from the bond market is fierce. The intense competition for commercial real estate credit has further pushed down bank margins. In the first quarter, the bank margin for a standard loan (50 percent loan-to-value and a 3-year tenor) was 186 basis points, a decline of 9 basis points from the fourth quarter of 2024.

Even though bank margins continue to decline, swap rates have increased since the fourth quarter of 2024. As a result, the total financing rate rose in the first quarter, despite the further drop in bank margins. The total financing rate, based on the 5-year swap rate, is around 6 percent for the majority of new loans. This is slightly higher compared to autumn 2024, but 70 basis points lower than the peak in autumn 2023. The borrowers securing the most favourable bank margins are seeing total financing rates around 5 percent, representing a decline of 100 basis points from the peak.

Do you want to know more about the findings from the banking survey? Please contact Robert Nystad at nystad@union.no or 906 19 758.