Treasury's daily par yield for the 10-year note was 5.24% on September 28, up from 4.79% on September 1. The 30-year fixed mortgage rate in Freddie Mac's weekly survey rose to 7.03% on September 24, from 6.30% a year earlier. For landlords, that combination hits three places at once: the cost of refinancing, the value of the building, and how long renters stay renters.
What happened
Long-term rates have climbed all month. Treasury's daily data shows the 10-year yield reaching 5.00% on September 15, reaching 5.11% on September 23 and 5.24% on September 28. The 30-year yield was 5.56% on September 28. Commercial Observer reported that the September 23 readings were the highest in 19 years for both the 10-year and 30-year Treasuries.
The Federal Reserve raised its target range by a quarter point to 3-3/4 to 4 percent on September 16, in a 12-0 vote. The statement said the move "will support a timelier return" to its 2 percent inflation goal. It did not commit to further hikes.
Markets now expect more. Redfin's economic research team wrote on September 28 that futures markets are pricing in hikes that would take the federal funds rate to 5% by the end of next year, 75 basis points more in hikes than it expected a month ago. Redfin tied the repricing to stronger-than-expected economic data, oil-price volatility and an increasingly hawkish Fed, and said the same data kicked off a 20-basis-point climb in the 10-year yield last week.
Mortgage rates followed. Freddie Mac's 30-year average rose 0.08 point in a week to 7.03%. HousingWire's weekly tracker showed a sharper move: it reported rates climbed to 7.49% before settling at 7.43%, and purchase applications were down 11% year over year.
Why it matters for property managers
Refinancing is the pressure point. A Lee & Associates capital advisor told Commercial Observer that asset classes like multifamily that locked into floating-rate debt when rates were near zero will be hurt the most, and a PRP Real Assets executive said most multifamily deals this summer were lender-forced sales after years of "extend and pretend." If a loan, rate cap or interest-only period in your portfolio ends in the next 12 to 18 months, the refinance math you ran last spring is probably out of date.
Values move with rates. Higher Treasury yields generally push buyers' required returns up, and Commercial Observer notes that higher cap rates translate into falling property values unless income rises. Commercial Observer also reported broken transactions as buyers and sellers pull back from agreed prices. If you are marketing an asset or relying on an appraisal for a loan, expect those numbers to be tested.
Renters may stay put longer. With purchase applications down 11% year over year, fewer tenants are likely to leave to buy. That can support renewals, but it is not the same as pricing power. RealPage reported that concessions were offered on 15.4% of stabilized units in August, down from 15.8% in July but above 14.3% a year earlier, with the average concession at 11% of asking rent and effective rents up only 0.9% year over year. Demand is steady; discounting has not gone away.
Operating costs are not easing. A tighter Fed does not cut your bills this quarter. Higher rates raise the cost of any credit line or construction loan you use for capital projects.
What to do this week
- List every loan maturity, rate-cap expiry and interest-only burn-off in the next 18 months. Rerun debt service coverage at current rates plus a cushion, not at the rate you assumed at acquisition.
- Call your lender or broker early on anything maturing in 2027. Ask what extension terms, paydowns or new cap costs look like now, before they become a deadline problem.
- Price replacement rate caps. If a cap expires soon, get quotes now; their cost rises with rate expectations.
- Lean into renewals. Tenants who would have bought a home may prefer to stay. Send renewal offers early, and weigh a modest increase against the cost of turnover and the concession you would need to fill the unit.
- Re-sequence capital projects. Fund essential and revenue-producing work first. Defer projects that depend on borrowed money until you know your financing cost.
- Update your owner reports. Owners will ask how rates affect value and cash flow. Give them a clear view of the debt schedule and what you are doing about it.
This is general information, not financial or legal advice. Confirm loan terms with your lender and counsel.
What we're watching
- The next Fed meeting. Futures pricing reflects expectations, not decisions. Any signal on further hikes will move long rates.
- Freddie Mac's weekly survey each Thursday, and whether the 30-year rate holds above 7%.
- The 10-year yield. HousingWire's Logan Mohtashami argued that 9% mortgage rates would require a 10-year yield above 6% along with other conditions he considers unlikely.
- Concessions. If September data shows discounting rising again as new supply delivers, renewal pricing gets harder.