Multifamily borrowers face a 41 percent jump in Refinancing interest rates
The short version
- Newmark, the real estate advisory firm, reports a 41 percent rate hike.
- Older loans averaged 4.04 percent while new loans sit at 5.69 percent.
- Property sales prices are feeling the heavy squeeze.
Check your maturing real estate loans now. Multifamily borrowers face a sharp 41 percent jump in Refinancing interest rates as older loans come due, according to a new report from Newmark, the real estate advisory firm. Loans maturing in the third quarter of 2026 carried an average interest rate of 4.04 percent.
Today, new loans sit at an average of 5.69 percent. At the same time, cap rates have averaged 5.5 percent, creating a negative leverage relationship that has weighed on the multifamily market for months. With loan spreads already narrow, borrowers have limited protection against further increases in benchmark rates.
Although the wave of maturities has not yet caused the expected rise in financial distress, property sales prices show clear signs of pressure. Roughly 39 percent of multifamily properties sold traded below their previous inflation-adjusted purchase price. That figure is up steeply from just 6 percent at the end of 2021.
Researchers Joe Biasi, Will Levy and Mike Wolfson expect that share to remain elevated as more borrowers refinance and adjust to the higher rate environment. For a property owner holding a large mortgage, that difference in the monthly interest payment can wipe out yearly cash flow before a single tenant pays rent.
