Apartment loans packaged into commercial mortgage-backed securities (CMBS) are now going bad faster than the market as a whole. Trepp's September report put the multifamily CMBS delinquency rate at 8.04%, above the 8.02% overall rate, the first time multifamily has topped the overall figure since the Covid shutdowns. For operators, the practical message is to start your refinance conversations earlier than you planned.
What happened
Trepp's September CMBS data, as summarized by Yield PRO, shows multifamily delinquencies rising 35 basis points in the month, the largest jump among the major property types. A year earlier the multifamily rate was 6.59%, and two years earlier it was 3.33%, so the rate has climbed 145 basis points in a year and 471 in two.
Context matters here. This is the rate for CMBS loans only. Bank, agency and life-company loans are not in it, so it is a stress signal rather than a measure of every apartment loan. Within the same report, retail delinquencies fell 62 basis points to 6.58%, and office stood at 12.16%. Multifamily is not the worst sector, but it is moving the wrong way.
The pressure comes from both sides of the income statement. Harvard's Joint Center for Housing Studies, citing Yardi Matrix data, reports that operating expenses rose nearly 37 percent between 2019 and 2026, from $6,950 per unit to $9,510. The same report says expenses rose faster than income for the third consecutive year, and net operating income grew 1.3 percent through early 2026. It also cites Trepp for the finding that multifamily property insurance cost nearly doubled between 2019 and 2024.
Financing is the third squeeze. The 10-year Treasury yield reached 5.347% on October 5, its highest level since April 2002, according to MPA. RealPage's economists note that the 30-year mortgage rate rose for a sixth straight week to 7.3%. Bisnow's reporting on capital markets quotes one investor saying that fundamentals outside New York and San Francisco are "pretty painful", and reports that executives at a Bisnow event expect lenders to pivot toward asset classes delivering better returns.
Why it matters for property managers
Your lender is paying attention to your numbers. Rising delinquency tends to make lenders and servicers stricter about reporting, reserves and covenant tests. That is our read, not a finding from the sources above, but it is a reasonable expectation for any loan coming due.
Expense growth is now the story, not just rent. With wage growth at 3% annually, the slowest pace in about five years, there is a limit to what residents can absorb. Insurance, payroll and repairs are rising on your side while renewal increases are capped by what residents can pay. Owners who cannot show expense control will have a harder conversation with a lender.
Owner and investor reporting gets more important. If you manage on behalf of owners, a loan maturity or covenant problem becomes your problem. Clean, current financials and a clear plan shorten those conversations.
Rate relief is not guaranteed. Redfin's economics team says mortgage rates rose last week even as odds of a Fed hike fell, because the bond market stays "tensed up". Do not underwrite a refinance on an assumed drop in rates.
What to do this week
- List every loan maturing in the next 24 months. For each, note the maturity date, rate type, any extension options and the debt service coverage test.
- Re-run debt service coverage at today's expenses and rents. Use your actual trailing twelve months, not the budget. Flag anything near its covenant threshold.
- Audit your biggest expense lines. Insurance, payroll, utilities and repairs and maintenance. Get competing insurance quotes well before renewal, because Harvard says rising costs have been driven in part by growing insurance premiums.
- Talk to your lender before you have to. If a loan is within a year of maturity or close to a covenant limit, ask about extension terms and what documents they will want.
- Confirm reserves and cash controls. Make sure owners understand what is held back and what can be released.
- Tighten monthly reporting to owners. Send variance explanations while there is still time to act on them.
What we're watching
- Trepp's October report, to see whether multifamily stays above the overall CMBS rate or the September jump proves a one-month spike.
- The next inflation data and the Fed's October 28 meeting. Redfin calls the inflation data the deciding factor, so treat any outcome as unknown until it happens.
- Treasury yields. Whether the 10-year holds above 5.3% determines whether refinance math improves or worsens.
- Insurance renewals in your markets, which, per Harvard, have been a contributor to rising operating costs.
This is general information, not financial or legal advice. Review your loan documents and talk to your lender and counsel about your specific terms.