Last updated: February 2026
Commercial mortgage rates change daily based on market benchmarks, lender appetite, and deal-level risk. Evaluating pricing requires comparing the total facility cost: the rate index and spread, establishment fees, amortization, and covenant requirements.
In the current market landscape, commercial property loan rates are not “one size fits all.” Lenders price risk based on a combination of macroeconomic factors and property-specific fundamentals.
Market Benchmarks: Floating rates are typically priced off the BBSW (Bank Bill Swap Rate), while fixed rates track the Commonwealth Government Bond / Swap Curve.
Property Fundamentals: Occupancy rates, the quality of the “Tenant Covenant,” and the WALE (Weighted Average Lease Expiry) directly impact the margin a lender will charge.
Leverage & Coverage: Deals with lower LVR (Loan to Value Ratio) and higher DSCR (Debt Service Coverage Ratio) qualify for “prime” pricing.
Asset Type: Industrial and medical assets currently command sharper pricing compared to secondary office or specialized hospitality assets.
Sponsorship: A borrower’s track record, net worth, and liquidity can reduce the perceived risk and lower the final interest margin.
Note: These figures reflect market averages for February 2026 following recent RBA cash rate adjustments. Actual pricing is determined during underwriting.
| Loan Type | Estimated Rate Range | Typical Terms |
| Bank/Institutional (Stabilised) | 5.50% – 7.25% | Up to 65% LVR; 3-5 year terms |
| Non-Bank / Private Credit | 7.50% – 9.50% | Higher leverage; faster execution |
| Bridge / Transitional Loans | 8.50% – 12.00% | Interest-only; short term (1-2 years) |
| Construction Finance | 9.00% – 14.00% | Priced on risk and “Line Fee” structures |
When reviewing commercial real estate loan rates, the “headline rate” is only part of the story. Use this checklist to evaluate the true cost of capital:
Index + Spread: For floating loans, confirm the margin over the 30 or 90-day BBSW.
Establishment & Exit Fees: Upfront costs can significantly impact the “all-in” yield of a short-term loan.
Interest-Only vs. P&I: Does the loan allow for interest-only periods to maximize cash flow?
Prepayment Penalties: Check for “Break Costs” on fixed loans or “Yield Maintenance” clauses.
Line Fees & Non-Utilisation Fees: Common in construction or revolving facilities, these apply to the undrawn portion of the loan.
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Both are common in Australia. Permanent loans for stabilized assets are often fixed for 3–5 years. Bridge and construction loans are almost exclusively floating, typically priced as a margin over the BBSW.
Lenders view commercial property as higher risk due to potential vacancy periods and specialized building uses. Additionally, the regulatory capital requirements for banks are higher for commercial lending, which is passed on to the borrower.
The spread is the profit margin the lender adds to the base market rate. If the 90-day BBSW is 4.00% and your spread is 2.50%, your “all-in” variable rate is 6.50%.
Providing stronger “Tenant Covenants” (blue-chip tenants), reducing your requested LVR, and presenting a professional “lender-ready” reporting package are the fastest ways to secure sharper margins.
