Fed Holds Rates Steady After September Increase

At its October meeting, the Federal Open Market Committee (FOMC) voted 10-2 to maintain the target range for the federal funds rate at 3.75% to 4.00%, with two members voting to raise rates by a quarter percentage point. Policymakers approved a 25 basis point increase at their last meeting in September. The Fed announcement noted that the economy is expanding at a strong pace, despite uncertainty from geopolitical conflicts, and that employment numbers are positive. However, inflation remains above the Fed’s 2% goal.

Fed Chair Kevin Warsh said, “...as we widen the frame to survey the broad economic and financial picture, real activity is clearly pointing in the right direction. That’s good news. But inflation is too high. Energy and related prices have moved higher again in recent weeks. And our job is to ensure that relative price changes in some sectors do not broaden out across the economy, and that inflation expectations remain as they are anchored.”

Ample Capital in a High-Yield Environment

In the six weeks following the September FOMC meeting, Treasury rates have experienced heightened volatility, with the five-year note repeatedly crossing the 5% threshold. Even so, intense competition among lenders has preserved steady liquidity across the commercial real estate sector.

“Lenders are keeping capital flowing to prime assets by aggressively compressing spreads to better compete in a high treasury rate environment,” said Anthony Priest, a Director in the Capital Services Group.

Priest noted that the Capital Services team recently negotiated a term sheet with an out-of-state bank that is pricing a $28 million fixed-rate refinance loan for a Manhattan multifamily at 175 bps over the five-year Treasury.

At the same time, the rate volatility has driven some sponsors toward floating-rate loans. By pairing accommodating underwriting, prepayment flexibility, and interest-only structures, borrowers can maximize upfront proceeds while preserving the option to refinance, sell or capture rate cuts over a 12- to 36-month horizon.

Pricing reinforces that strategy. For example, a floating rate agency loan can be as low as 150 basis points over the 30-Day Average SOFR, which is hovering near 3.9%

National Debt Growth Mirrors Steady New York City Sales

Nationally, total commercial and multifamily mortgage debt outstanding reached $5.1 trillion in Q2 2026, buoyed by a $42.9 billion net quarterly gain, according to the Mortgage Bankers Association (MBA). Multifamily borrowing drove roughly half that volume, adding $20.7 billion to reach $2.3 trillion.

Local transaction volume reflects this activity. In New York City, Ariel Property Advisors reported $23.69 billion in investment sales across 1,914 deals through Q3 2026, a year-over-year increase of 9.1% in volume and 7.9% in transactions. Following a brisk first half with annual dollar volume growth of 36% in Q1 and 31% in Q2, third-quarter dollar volume declined by 25.2% to $6.73 billion, largely reflecting tough comparisons against outsized trades in Q3 2025, including the $1.08 billion sale of 590 Madison Avenue.

Diverse Lending Sources Anchor Acquisition, Refinance and Value Add Deals

Demonstrating that capital remains accessible despite rate volatility, the Capital Services Group’s national pipeline is pacing 2.5 times higher than in 2025.

Bolstered by a surge in third-quarter activity, the group has arranged acquisition and refinance loans across New York and nationwide markets, leveraging deep relationships with balance-sheet banks, credit unions, private credit and debt funds to secure competitive pricing and flexible structures.

These transactions have included loans that required identifying capital in the private lending space to provide refinancing solutions in an elevated rate environment.

Notable recent closings and terms include:

• Suburban Philadelphia Multifamily Acquisition: A $14.43 million debt fund for a 100,000-square-foot, market-rate property, structured with a three-year floating rate at SOFR + 3.40% and 78% LTC.
• Student Housing Acquisition. An $8 million acquisition loan for a 52,950 SF, 59-unit student housing complex in Bethlehem, PA. The loan from a credit union included a 15-year term, 5.85% interest rate and 74% LTV.
• Philadelphia Free-Market Multifamily Refinance: A $6.6 million five-year bank loan for a 57-unit, 60,000-square-foot asset at 6.63% and 75% LTV.
• Upper West Side, Manhattan Cash-Out Refinance: A $3.605 million, five-year non-recourse bank loan for a 10-unit, 6,100-square-foot brownstone, priced at 175 bps over the five-year Treasury, with one year of interest-only followed by 30-year amortization.
• Woodside, Queens Owner-User Commercial Acquisition: A $3.3 million credit union loan for a 4,000-square-foot commercial building, featuring a 10-year term, a 6.13% rate, and 70% LTV.
• Brooklyn Heights Multifamily Acquisition & Renovation: A $3.25 million two-year bridge loan from a debt fund for a 10-unit, 5,360-square-foot property, underwritten at 75% LTC.

Takeaway for Borrowers

While the macroeconomic landscape remains dynamic, the resilience of debt markets signals sustained confidence in commercial real estate fundamentals. With national debt balances expanding and lenders actively competing for quality deals, the market has proven that capital remains readily available for sponsors who know where to look. As the sector moves into the final quarter of the year, disciplined underwriting paired with flexible debt structures will continue to drive transaction volume.