Interest rates aren’t “spiking.” They’re re-calibrating, and fast.
The 10-year Treasury yield has pushed past 4.4%, up from below 4% just months ago. This isn’t a fluke. It’s the natural result of a $37 trillion national debt, over a trillion dollars in annual interest payments, persistent inflation, and a market that’s now demanding higher yields just to keep showing up.
In other words, rates are rising because they have to, and they’re not going anywhere.
This shift is hitting commercial real estate like a slow-moving wreck. Cap rates are climbing, transactions are stalling, and loan extensions are becoming the fallback plan for thousands of owners who can’t sell without taking a loss and can’t refinance without bleeding cash. So they wait, hoping for rates to “come back down.”
Multifamily, ironically, is leading the pack in loan extensions, especially those projects financed with floating-rate debt. The very product that was “smart money” a couple years ago is now a liability.
Residential mortgage rates are hovering around 6.8%, which is sidelining buyers and forcing many would-be homeowners to stay in the rental pool. Good news for occupancy, but bad news for purchasing power, and worse for long-term economic movement.
In Q1 2025, the market saw 19% fewer CRE transactions per day compared to the 25-year average. That’s not seasonal fluctuation. That’s structural adjustment. And unless investors shift their expectations, that gap’s only going to widen.
Here’s the uncomfortable truth: we’re not going back to 3% rates. Not this cycle. Maybe not ever.
We’re likely living in a 5–6% world now. And while some will resist that reality, the professionals, the ones who know how to adapt, are already adjusting.
That’s where execution becomes the edge. It’s not about hoping things normalize. It’s about operating smarter, underwriting tighter, and building a plan that performs in today’s climate, not yesterday’s.
If you’re still waiting for the market to “get better,” you’re already behind.
I’m working with investors right now who are stepping into this new landscape with clarity, confidence, and results. If that’s not how you’d describe your current approach, maybe it’s time we talked.