Eagle Crest Residences, a Clear Opportunities Fund II acquisition.
By Clear Investment Group. Market data as of October 19, 2026.
The 10-year Treasury yield closed at 5.15% on October 19, 2026, up 0.96 percentage point from the 4.19% it posted on the first trading day of the year, according to the U.S. Treasury’s daily yield curve data. That is below its October 5 close of 5.31%, a level CNBC reported as the highest since 2002, but the move this year remains close to a full point.
Headlines compress that into “rates are up.” For an apartment owner, the useful question about multifamily interest rates is narrower: which rate sets the payment on a specific loan, and can the property carry it? The answer depends on how the loan is priced. A fixed-rate loan that has already closed does not reprice when the 10-year moves. A floating-rate loan resets with a short-term index, not the 10-year. The 10-year matters most at two moments: when a fixed-rate loan is quoted, and when an existing loan has to be refinanced.
Only one of these is the rate a borrower pays. The other three are inputs.
| Rate | What it is | Level | Role in a multifamily loan |
|---|---|---|---|
| Federal funds target range | The Federal Reserve’s policy rate for overnight interbank lending | 3.75% to 4.00%, raised a quarter point on September 16 | Shapes short-term funding costs. It is not the rate on a commercial mortgage. |
| SOFR | The Secured Overnight Financing Rate, the cost of overnight borrowing backed by Treasuries, published daily by the New York Fed | Tracks the policy range closely | The index most floating-rate bridge and balance-sheet loans reset against, typically monthly. |
| Treasury yields | Market yields on government notes of a given term | 5-year 4.94%, 7-year 5.04%, 10-year 5.15% | The benchmark for most fixed-rate loans, usually a Treasury of similar term plus a lender spread. |
| All-in coupon | The benchmark or index plus the lender’s spread | Specific to each loan | The rate that sets the payment. |
Treasury yields are end-of-day par yield curve rates for October 19, 2026.
This year’s market data shows why the distinction matters.
| Benchmark | Jan. 2, 2026 | Oct. 19, 2026 | Change |
|---|---|---|---|
| Fed funds target (upper bound) | 3.75% | 4.00% | +0.25 |
| 3-month Treasury bill | 3.65% | 4.27% | +0.62 |
| 2-year Treasury | 3.47% | 4.77% | +1.30 |
| 5-year Treasury | 3.74% | 4.94% | +1.20 |
| 7-year Treasury | 3.95% | 5.04% | +1.09 |
| 10-year Treasury | 4.19% | 5.15% | +0.96 |
| 30-year Treasury | 4.86% | 5.48% | +0.62 |
Changes in percentage points. Treasury figures are U.S. Treasury par yield curve rates; the fed funds range is from Federal Reserve policy statements.
The Fed raised its policy rate by a quarter point this year. The 10-year rose nearly four times as much, and the 5-year and 7-year, common benchmarks for shorter fixed-rate terms, each rose by more than a full point. An owner who expected long-term borrowing costs to follow the Fed’s modest move would have badly underestimated the change in refinancing costs.
The short end carries a signal as well. The 3-month bill now yields more than the top of the Fed’s target range, consistent with minutes from the September meeting, in which most participants judged another increase likely to be appropriate by year end. For floating-rate borrowers, that points to higher SOFR resets and more expensive interest rate caps.
A one-point increase is close to what the 10-year did this year. On a hypothetical $20 million loan with 30-year amortization and $2.0 million of net operating income (NOI), here is what that move does to the numbers. The example is illustrative only and assumes monthly payments and no fees.
| All-in coupon | Monthly payment | Annual debt service | DSCR | Max loan at 1.25x DSCR |
|---|---|---|---|---|
| 6.50% | $126,414 | $1,516,963 | 1.32x | $21.1 million |
| 7.50% | $139,843 | $1,678,115 | 1.19x | $19.1 million |
DSCR is debt service coverage ratio: NOI divided by annual debt service.
Annual debt service rises by $161,152, or 10.6%. NOI did not change, yet coverage fell from 1.32x to 1.19x, below the 1.25x minimum many lenders apply. At refinancing, that shortfall does not appear as a missed payment. It appears as a smaller loan: at 7.50%, the property supports about $19.1 million, roughly $0.9 million less than the balance coming due. The owner covers that gap with new equity or accepts lower leverage.
The size of the move is only half the story. A property’s ability to absorb it is set by the coverage cushion it already has.
The benchmark sets the direction, and the spread sets the lender’s price for a specific deal. Two loans quoted on the same day off the same Treasury can carry very different coupons, and a flat 10-year can still produce a worse quote if spreads widen.
Spreads respond to factors that have nothing to do with Treasury yields:
For older, operationally challenged properties, the spread is often the larger variable. A lender pricing a property with stabilization risk is underwriting the operator as much as the asset, which is why two owners facing the same Treasury market can receive very different terms.
Whether the 10-year moved is the wrong place to stop. The real test is whether the property’s cash flow still supports its capital structure under a realistic downside case. Four checks answer that:
The same one-point move does very different things to different deals. What separates them is usually decided at acquisition: the price paid, and how much of the business plan depends on cheap debt.
A thin deal is priced so that it works only if financing stays inexpensive and the property performs exactly to plan. Buyers who paid full value for stabilized properties when long-term rates were lower are often in this position. There is little NOI growth left to capture, and the coverage cushion is whatever the purchase price left behind. When rates rise, the math has nowhere to go.
A deal underwritten with a wide margin behaves differently. When the purchase price sits well below replacement cost and the business plan rests on operating improvements the owner controls, such as filling vacant units, restoring collections, and reducing turnover, NOI growth can outpace a higher cost of debt. The rate move still hurts. It just doesn’t break the deal.
| Thin deal | Deal with operating upside | |
|---|---|---|
| NOI at refinance | $2.0 million (flat) | $2.5 million (after stabilization) |
| DSCR at 7.50% | 1.19x | 1.49x |
| Max loan at 1.25x DSCR | $19.1 million | $23.8 million |
| Against the $20 million balance | $0.9 million short | Fully covered |
Hypothetical illustration using the same loan terms as the example above. Not based on any specific property or fund.
This is the logic behind Clear Investment Group’s pricing discipline. CIG focuses on distressed workforce housing, where value is created by fixing operations rather than by leverage or rising market prices, and where acquisitions can often be made below replacement cost. That approach does not make a property immune to higher rates. It means the underwriting starts with a cushion, so a move like this year’s is something the plan can absorb rather than something that ends it. When a deal only works if debt stays cheap, disciplined buyers walk away.
A move in the 10-year reaches a specific property through three channels: the loan’s structure, the lender’s spread, and the coverage cushion the property already has. Owners who test their debt against a realistic downside case well before maturity keep their options open. Owners who wait for the refinance date tend to learn what the market thinks of their property all at once.
Clear Investment Group is a Chicago-based, woman-owned, vertically integrated real estate investment firm focused on workforce housing. With in-house property management, leasing, and construction oversight, CIG acquires and stabilizes distressed multifamily communities that serve working Americans.
This post is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities. Any offering is made only by the applicable Private Placement Memorandum. Past performance is not indicative of future results.
