Private Lending Market Update 2025 Q3: Data & Insights from Lightning Docs

In this episode of Private Lending Insights, I interviewed Nema Daghbandan, Esq., CEO of Lightning Docs and Partner at Fortra Law, to discuss nationwide trends in private lending interest rates, loan volume, and market dynamics for both bridge and DSCR loans — based on real data from thousands of transactions each month on the Lightning Docs platform. Nema breaks down rate movements across major states, explains why competition is intensifying, and shares insights into how lenders use Lightning Docs data to stay competitive.

This episode offers one of the most data-rich and forward-looking discussions in the Private Lending Insights series, combining legal expertise, technology innovation, and real-time analytics to paint a clear picture of where private lending stands — and where it’s headed next.

Interview Summary

In the 23rd episode of Private Lending Insights, Nema Daghbandan, Esq. sat down for an in-depth discussion on the state of private lending in 2025. Drawing from one of the largest real-time data sources in the industry — thousands of bridge and DSCR loan documents generated each month through Lightning Docs — Nema offers a comprehensive look at where interest rates, loan volume, and market sentiment are heading.

This data-driven conversation blends market analytics with Nema’s unique legal and operational insights, giving private lenders and real estate investors a clear understanding of how the industry is evolving — and what to prepare for in 2026.

Private Lending Interest Rate Trends

Over the past year, bridge loan rates have steadily declined, signaling growing competition among lenders and improved stability in capital markets.

• Average bridge loan rates fell from 11.1% (Sept 2024) to 10.43% (Sept 2025).

• The drop has been gradual and broad-based across most states.

• Investors remain active, and capital market spreads have tightened, suggesting continued demand for business-purpose loans.

• Rate pressure is now moving downward as new capital enters the space, particularly from institutional sources and securitization investors.

Nema explains that while originators may still feel constrained by lower borrower demand, capital providers and investors are showing renewed confidence, creating a favorable environment for future lending growth.

Loan Volume & Lightning Docs Data

Lightning Docs processes data from over 5,000 loans per month, giving unparalleled visibility into national and regional lending trends.

• Loan volume has remained steady through 2025, with some markets seeing a rebound after the slowdown in 2023–2024.

• Lenders are using Lightning Docs’ anonymized data to benchmark pricing, monitor competitors, and identify emerging demand pockets.

• The dataset now covers a wide range of products, including bridge, DSCR, construction, and commercial loans — providing a holistic view of the private lending ecosystem.

Nema highlights that this real-time data is especially valuable because it reflects actual closings, not just rate sheets or projections.

Regional Market Insights

The episode takes a closer look at activity across key states:

• California continues to lead the country in private loan volume, supported by a strong base of professional investors and developers.

• Texas remains one of the most dynamic markets, with consistent fix-and-flip and rental loan demand despite insurance and tax headwinds.

• Florida shows high DSCR lending activity, though lenders are becoming more selective due to property insurance costs and market saturation.

These regional nuances help lenders understand where opportunities — and risks — are shifting in 2025.

The Rise of DSCR Lending

One of the most notable trends discussed is the explosive growth in DSCR loans (Debt Service Coverage Ratio loans for rental properties).

• DSCR loan volume has increased by over 100% year-over-year.

• Private lenders are aggressively entering the space to compete with non-QM and wholesale lenders.

• Institutional investors continue to buy DSCR paper, creating a steady flow of liquidity.

• Lenders are focusing more on refinances and long-term rental portfolios as investors pivot from short-term flips to income-producing assets.

Nema explains that DSCR lending has become a critical product line for many private lenders seeking predictable, scalable revenue and long-term borrower retention.

Capital Markets & Securitization

A key theme of the conversation is the growing role of securitizations and institutional capital in private lending.

• Spreads remain tight, indicating investor confidence in business-purpose loans.

• Nema predicts that by 2026, smaller lenders producing $250M–$400M per year could securitize loans directly, bypassing traditional aggregators.

• This shift could democratize access to institutional funding and give originators more control over execution and pricing.

He also notes that lenders are refining underwriting discipline, adding secondary valuation reviews, and collaborating with rating agencies to protect asset quality after the Baltimore DSCR fraud case discussed in a prior episode.

Technology, AI & Automation

Lightning Docs continues to evolve as a technology-first legal document platform. Nema discusses how AI and automation are transforming operations for private lenders:

• Automated data extraction from LOS systems for faster document prep.

• AI-assisted consistency checks for legal accuracy and compliance.

• Seamless integrations with leading Loan Origination Systems (LOS) and CRM platforms.

• Custom features that adapt to lenders’ internal processes and branding.

These advancements not only improve efficiency but also reduce human error and ensure legal precision at scale — especially important for lenders operating across multiple states.

Legal Precision & the Fortra Law Rebrand

In 2025, Nema and his partners rebranded to Fortra Law, reflecting a broader focus on innovation and client collaboration.

• Fortra Law remains one of the leading legal firms in private lending, representing over 90% of the top 30 lendersin the U.S.

• The firm’s mission is to provide clear, compliant, and lender-focused counsel for both originators and investors.

• The partnership between Fortra Law and Lightning Docs ensures that both technology and legal frameworks evolve together to serve the industry’s changing needs.

Outlook for 2026

Looking ahead, Nema shares a cautiously optimistic view of the private lending industry:

• Rates are expected to remain stable, with modest downward movement if inflation stays contained.

• Loan volume is projected to rise as investor confidence grows and new capital sources enter the market.

• Digital processes such as e-recording, e-signing, and AI underwriting will become standard.

• Data transparency and shared analytics will empower lenders to price more competitively and manage risk more effectively.

He emphasizes that while the market has matured, innovation and collaboration will continue to drive growth — and platforms like Lightning Docs will remain at the forefront of that progress.

Visit Fortra Law’s profile to learn more and find their contact. Connect with Nema on LinkedIn.