Multifamily owners with loans approaching maturity are confronting significantly higher refinancing costs, with new analysis quantifying the shift. Newmark reports that multifamily loans maturing in Q3 2026 carried an average interest rate of 4.04%, while new loans are pricing at about 5.69% with an average cap rate of 5.5%. This rate mismatch is producing negative leverage for many borrowers as they attempt to refinance.
The 165-basis-point increase in borrowing costs translates into an estimated 41% rise in interest expense on the same loan balance, according to Newmark. Multifamily borrowers have historically benefited from support and liquidity provided by Fannie Mae and Freddie Mac, which helped keep their spreads over benchmark rates tighter than those available to other property types. However, Newmark notes that those spreads have little room left to compress, limiting borrowers’ insulation from further benchmark rate increases.
Newmark also points out that much of the multifamily debt stack has not yet re-priced. Roughly 81% of securitized multifamily debt maturing before 2029 carries an interest rate below 5%, suggesting that a large portion of loans will face higher borrowing costs at refinancing. This looming repricing risk is occurring alongside separate research indicating that many borrowers will need additional equity to complete refinancings.
In a separate analysis of every agency and CMBS multifamily loan maturing between October 2026 and December 2028, CRED iQ estimates that borrowers will need to contribute about $6.8 billion in new equity to refinance. The firm found that 23% of the loans studied, representing 31% of the total balance, require fresh equity. The median shortfall is 15% of the loan amount, or approximately $25,000 per apartment, CRED iQ reports.
Rising benchmark rates are exacerbating the gap. When SOFR increased from 3.62% to 3.85% in September, 178 loans totaling $4 billion fell below a 1.25x debt service coverage test, adding $846 million to the equity shortfall, according to CRED iQ. The firm estimates that each additional 25-basis-point increase would contribute roughly $1.0 billion more to the equity gap, and that two further hikes would leave 39% of maturing multifamily debt short of a viable refinance. Loans originated in 2021 and 2022 with a median coupon of 3.35% now face refinancing rates roughly two to three percentage points higher; CRED iQ says 46% of these loans, representing 57% of their balances, will need new equity.
Despite concerns about a wave of distressed assets tied to maturities, the data so far point more to pricing pressure than widespread default. Newmark notes that approximately 39% of multifamily properties sold recently traded below their previous inflation-adjusted purchase price, up 6 percentage points from late 2021. The firm expects this elevated share of price declines to persist as borrowers refinance and adapt to the higher-rate backdrop.
CBRE research highlights that the 10-year Treasury yield has remained near or above 5% since early September, its highest sustained level since 2007. The firm says pressure is most acute on multifamily and industrial asset pricing, where cap rate spreads to the 10-year Treasury are historically compressed at less than 100 basis points. CBRE expects cap rates to increase by at least 40 to 60 basis points in the near term and notes that rent growth will likely be insufficient to fully offset the higher cost of debt capital. Looking ahead, CBRE anticipates long-term rates stabilizing and gradually moving lower in 2027, with potential Federal Reserve cuts to short-term rates in 2028 and a pickup in investment volumes in the second half of 2027, assuming no major macroeconomic disruptions.
