10-Year Holds Above 5% as Peak-Era Debt Comes Due

The 10-year Treasury closed at 5.17% on September 25, according to U.S. Treasury data. A year earlier it sat at 4.16%. Most of the climb came this summer, as the 10-year moved from about 4.44% at the end of June to 4.75% in July and past 5% in September.

The whole curve moved

Short and long rates are both higher. The 2-year stood at 4.81% and the 30-year at 5.49%, leaving the gap between the 2-year and 10-year at about 36 basis points. The 5-year and 7-year sat at 4.98% and 5.06%.

Floating-rate borrowers look at a different number. The New York Fed’s 30-day average of SOFR, the benchmark for most bridge loans, was about 3.71% as of September 25. Lenders add a spread on top, so all-in costs on floating debt remain well above what many owners underwrote in 2021.

Where the pain is

Owners who bought with short-term floating-rate loans in 2021 and 2022 face the hardest math. Many of those loans are reaching maturity with property values below purchase prices, which forces a choice: add equity, sell, or hand the keys back. That is where much of Houston’s current distress comes from.

Buyers are still active

Higher rates have not frozen the market. Northmarq reports that Houston apartment sales are running 31% ahead of last year, and it expects transaction activity to pick up in the second half of 2026. Buyers are paying less per door and demanding higher going-in yields.