February is always a unique month for private lending. With fewer business days and the typical early-year slowdown, it often trends below its neighboring months. While the shorter calendar still played a role, February 2025 defied seasonal expectations once again, with strong loan volumes, rising average loan amounts, and stable interest rates across bridge and DSCR loans.
For private lenders navigating this evolving market, staying informed on loan volume trends, interest rate movements, and regional shifts is key. Let’s break down this month’s highlights.
Record-Breaking Bridge Loan Volume
Even with three fewer business days than January, bridge loans exceeded January volumes when we tracked the same user base of 164 unique users from January 1, 2024—representing a 48% year-over-year (YoY) increase from February 2024. Demand remained steady, reinforcing the continued strength of the bridge loan market.
Bridge Loan Interest Rates & Loan Amounts
Bridge loan interest rates edged down slightly to 10.77%, compared to 10.83% in January. Meanwhile, average loan amounts increased by $10,000, reaching $644,776. This marks the ninth time in the last ten months that bridge rates have declined, bringing them to their lowest level since January 2023. Rates remain evenly distributed, with slightly less than 40% of loans between 10-10.99% and an almost equal distribution of loans between 9-9.99% and 11-11.99%.
DSCR Loan Market Trends
At first glance, DSCR loan volume appeared to cool slightly, with 1,957 loans closed in February. However, accounting for the three fewer business days, February was actually on pace to outperform January—the highest-volume DSCR month in Lightning Docs history which represented an astonishing 123% YoY increase comparing January 2024 to January 2025. Despite the short month, February still delivered the third-highest DSCR volume on record, reflecting a 92% YoY increase when tracking the same 35 users.
DSCR Loan Interest Rates & Loan Amounts
DSCR interest rates stabilized, dipping just one basis point to 7.68%, a stark contrast to the previous three months, when rates climbed by roughly 20 basis points each month. This marks the first DSCR rate drop since October 2024. With treasuries continuing to be quite volatile we expect DSCR rates to similarly vacillate.
Average loan amounts, however, saw a significant jump, increasing by nearly $40,000 to surpass $319,000 tying average amounts from December 2024 which was a previous high-water mark. Rate variance remained small, with 65% of loans being issued between 7-7.99%.
Spreads: Loan Rates vs. Treasury & Consumer Mortgages
Surprisingly, while the 10-year treasury yield dropped 18 basis points and consumer mortgage rates followed with a 15 basis point decline, DSCR loan rates held nearly steady, dipping just one basis point. This caused the spread between DSCR loans and treasuries to widen to 3.23%. Similarly, bridge loan rates saw only a modest decline of 6 basis points despite the broader rate movement.
Top States for Private Lending
Two months into 2025, California, Florida, and Texas maintain their positions as the top three bridge loan states. South Carolina made a significant move, jumping 10 spots to enter the top 10, replacing Ohio. Other states showing strong momentum include Arizona and Indiana, which, while not yet in the top 10, have demonstrated notable growth.
For DSCR loans, Ohio claimed the top spot, with the top nine states remaining unchanged but shifting in rank. Maryland entered the top 10, knocking North Carolina off the list. Lenders looking for emerging DSCR markets should keep an eye on Oklahoma and Connecticut, both of which have started 2025 on an upward trajectory.
Top Counties for Private Lending
Bridge loan activity remained concentrated in key counties, with Los Angeles, CA, San Diego, CA, and Cook, IL retaining the top three spots. Charleston, SC, and Maricopa, AZ entered the top 10 for 2025, displacing Fulton, GA, and Riverside, CA.
For DSCR loans, Cuyahoga, OH is leading the way in 2025, while Dallas, TX entered the top 10, replacing Franklin, OH.
Private Lending Market Outlook
As we close out February, one thing is clear: private lending continues to defy seasonal expectations. With bridge loan volumes hitting record highs and DSCR loan amounts rising, demand remains strong.
For private lenders, having the right tools in place to generate accurate and compliant loan documents is more important than ever. That’s why Lightning Docs recently integrated with The Mortgage Office, making it even easier for lenders to generate loan documents directly within their loan servicing platform. This seamless API connection eliminates redundant data entry, speeds up document creation, and helps lenders stay ahead of market demand.
If you’d like to discuss what this data means for your business, or how Lightning Docs’ integration with The Mortgage Office can streamline your loan document process, get in touch with us today.