Rates check
The 2-year UST climbed 5 bps to 4.24%, the 5-year added 4 bps to 4.43%, and the 10-year rose 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 of the curve is the real story. The 10-year is knocking on 5% — a level that directly reprices permanent debt, pushes exit cap rates higher, and forces sponsors to bring more equity to every deal. Floating-rate borrowers feel the immediate sting of SOFR inching up, but the bigger pain is the forward curve: rate caps are more expensive, and refinance risk for 2024–2025 vintage bridge loans is intensifying. Underwriting assumptions written just 60 days ago are already stale.
The big story
The Federal Reserve hiked its benchmark rate for the first time since 2023, lifting the fed funds rate to a 3.75%–4.00% range in a unanimous vote, as reported by Commercial Observer and HousingWire. With a hot August CPI print already rattling markets, analysts see more tightening ahead. This isn't a one-and-done move — it signals the Fed is willing to sacrifice short-term transaction volume to break inflation. For CRE, the impact is immediate: higher base rates inflate debt costs across all asset classes, widen bid-ask spreads, and slow deal velocity. The 20-year Treasury auctioned at 5.47%, its highest yield since 1986, per Wolf Street, directly capping long-term fixed-rate CRE debt yields. Sponsors facing near-term maturities must either inject fresh equity, pursue creative structured finance, or accept that their cap rate assumptions need a hard reset.
Worth knowing
- Mortgage rates hit 7.58%, compressing leverage and widening spreads across all CRE asset classes — Mortgage News Daily
- Ken Griffin, Vornado, and Rudin closed a $3.3B construction loan for a Midtown Manhattan supertall, signaling deep institutional appetite for prime office — Commercial Observer
- Apollo and UDR formed a $2B multifamily JV, with Apollo taking a $1.34B majority equity stake — a pricing benchmark for core-plus product — Bisnow
- Realterm and Starwood Property Trust co-originated a record $672M IOS financing, proving deep liquidity for niche industrial — Connect CRE
- The 10-year UST is nearing 5% as oil prices rattle bond markets, pushing cap rates higher and stalling deal velocity — Mortgage Professional America
One number
5.47% — The 20-year Treasury auction yield, highest since 1986, directly capping CRE debt yields and raising refi costs for long-term fixed-rate deals.