Goldman Sachs Bank provided a $117-million construction loan last month for Dunstan Residences, a 292-unit multifamily development in West Newton/Image courtesy of Elkus Manfredi Architects

Lending conditions for commercial real estate showed the first improvement in seven quarters, according to a CBRE analysis of recent activity, amid signs that borrowing costs have peaked.

Banks were responsible for the most activity outside of government agency closings, according to CBRE’s Lending Momentum Index, which tracks CBRE-originated commercial loan closings in the fourth quarter of 2023 Banks maintained their position as the largest contributors to CBRE‘s non-agency loan closings for the seventh consecutive quarter, accounting for 39.5 percent of the total in the fourth quarter.

Alternative lenders, including debt funds and mortgage REIT’s, increased their share to 30 percent from 27.4 percent over the previous quarter and are targeting multifamily properties as the preferred asset type, according to CBRE.

Life insurers’ share of fourth-quarter origination volume declined from 33 percent from the previous quarter to 27.4 percent, focusing on fixed-rate acquisition and refinancing loans for industrial and retail properties.

“While the capital markets continue to present challenges, we are seeing more constructive lending conditions for specific asset classes,” James Millon, CBRE’s U.S. president of debt and structured finance, said in a statement.

Average capitalization rates rose 0.16 percent to 5.68 percent, while average loan-to-value ratios rose from 58.3 percent in the previous quarter to 61.4 percent.

Government agency lending declined from $29.8 billion during the previous quarter to $27.1 billion. The average fixed-rate mortgage on seven- to 10-year permanent loans rose 0.83 percent year-over-year to 6.04 percent.