Rates check
UST yields pushed higher across the curve Monday, with the 2Y adding 5 bps to 4.24%, the 5Y up 4 bps to 4.43%, and the 10Y climbing 5 bps to 4.74%. SOFR ticked up 2 bps to 3.65% while Prime held flat at 6.75%. For CRE borrowers, the relentless grind higher in the belly and long end means all-in debt costs continue to ratchet up. Fixed-rate permanent loans are now pricing well north of 6.50%, and floating-rate bridge execution is getting squeezed as SOFR rises and spread premiums widen. Sponsors should underwrite to a 10Y that could test 5% again — a level that fundamentally resets cap rates and leverage across every asset class.
The big story
The single most important item on the desk today is the re-spike in office CMBS delinquency to 12.2%, a level that eclipses the financial-crisis peak, as reported by Wolf Street. This isn't just another grim office stat — it signals the end of extend-and-pretend. Lenders are losing patience and moving toward forced sales and foreclosures, which will finally establish true price discovery in a sector that's been frozen. For brokers and sponsors, this means distressed-debt plays are about to become real, but it also means further write-downs for anyone holding legacy office exposure. The delinquency surge, combined with a 10Y that Commercial Observer notes recently hit 5.1%, creates a brutal feedback loop: higher rates crush refi options, pushing more loans into default, which in turn makes lenders even more cautious.
Worth knowing
- The 10-year yield is rattling bond markets as oil prices surge, with Mortgage Professional America warning that cap rates will push higher and deal velocity will slow until yields stabilize.
- Lenders are slamming the brakes on CRE dealmaking, with the 10Y at 5.3% causing a pullback in refinancings and acquisitions, according to Bisnow.
- Soaring yields have stranded REITs in M&A no-man’s-land; Bisnow reports few portfolio transactions are expected until rates stabilize.
- Despite the macro headwinds, deep liquidity exists for niche industrial: Realterm and Starwood Property Trust co-originated a record $672M IOS financing, per Connect CRE.
- Suburban multifamily construction debt is still flowing; Scale Lending provided a $68M loan for a 200-unit project in Rahway, NJ, as covered by Commercial Observer.
- The Fed's recent quarter-point hike to a 3.75%–4% range, its first since 2023, is not expected to curtail H2 2026 transaction volume, Commercial Observer notes, though analysts see more tightening ahead.
One number
12.2% — The office CMBS delinquency rate, now far worse than the financial-crisis peak, signaling that the extend-and-pretend era is ending and forced asset sales are imminent.