The Fed cut rates. Long-term Treasuries moved higher. That combination has steepened the yield curve in a way that changes the refinancing calculus for most CRE borrowers with near-term maturities.
The Rate Picture
SOFR closed at 3.62% (FRED · SOFR · 2026-06-18), down 67 basis points from 4.29% a year ago (FRED · SOFR · 2025-06-23). The effective fed funds rate stands at 3.63% (FRED · DFF · 2026-06-17), having declined 70 basis points over the same period (FRED · DFF · 2025-06-22).
The long end has moved in the other direction. The 10-year Treasury closed at 4.49% (FRED · DGS10 · 2026-06-17), up 15 basis points from 4.34% a year ago (FRED · DGS10 · 2025-06-23). The 30-year Treasury sits at 4.93% (FRED · DGS30 · 2026-06-17), up 6 basis points from 4.87% (FRED · DGS30 · 2025-06-23). The 5-year Treasury, which anchors a large share of fixed-rate CRE lending, is at 4.27% (FRED · DGS5 · 2026-06-17), up 36 basis points from 3.91% a year ago (FRED · DGS5 · 2025-06-23).
Put those together: short-term rates have fallen sharply while 5-, 10-, and 30-year Treasuries have all moved higher. A yield curve that was flat or modestly inverted twelve months ago is now positively sloped and steepening at the long end.
The Refinancing Decision
For borrowers carrying floating-rate bridge debt approaching maturity, the improvement in SOFR over the past year has provided meaningful payment relief. But floating-rate exposure still carries interest rate risk. If a borrower needs payment certainty through a business plan that extends several more years, locking in fixed-rate debt remains the more conservative path, even with fixed-rate benchmarks higher than they were.
For borrowers carrying fixed-rate loans originated in 2019 or 2020, many of those deals were struck at considerably lower Treasury rates. Those borrowers now face extension or refinancing into a materially different rate environment. The choice between extending existing debt at a penalty and refinancing at current rates deserves careful modeling. We see clients defaulting to extension when a refi at today's rates might actually pencil better once NOI recovery is factored in properly.
The 5-Year vs. 10-Year Decision
The spread between the 5-year Treasury at 4.27% (FRED · DGS5 · 2026-06-17) and the 10-year at 4.49% (FRED · DGS10 · 2026-06-17) is relatively modest in absolute terms. The 30-year at 4.93% (FRED · DGS30 · 2026-06-17) commands a larger premium over the 10-year.
For stabilized assets where the borrower has a long intended hold, the 10-year remains the standard structure. For assets still in lease-up, where the borrower anticipates a sale or recapitalization within three to five years, a 5-year fixed term may be more appropriate than paying for term certainty that will not be used.
For transitional assets, the floating-rate bridge market remains functional. In recent deal flow, we are seeing lenders remain active on well-located assets with credible execution plans, though underwriting standards on lease-up projections and exit valuations have tightened relative to 2021 and 2022.
Bank Lender Behavior
One signal borrowers tend to overlook: the bank CRE loan delinquency rate (more than 30 days past due) was 1.56% as of January 2026 (FRED · DRCRELEXFACBS · 2026-01-01), essentially flat from 1.57% a year earlier (FRED · DRCRELEXFACBS · 2025-07-01). That is not a distress signal. Banks are not pulling back from CRE at scale. In our recent processes, regional and community banks remain active participants, particularly on middle-market deals with full-recourse structures and meaningful borrower equity.
Life companies have also remained active this year, with pricing that tracks the long end of the Treasury curve. In recent processes we have run, life companies are generally targeting stabilized, income-producing collateral with long weighted average lease terms. They offer competitive fixed-rate execution for borrowers who can accept the associated covenant and prepayment requirements.
Credit Market Context
Investment-grade corporate yields stand at 5.21% (FRED · BAMLC0A0CMEY · 2026-06-17). High-yield corporate yields are at 6.90% (FRED · BAMLH0A0HYM2EY · 2026-06-17), down from 7.04% a year ago (FRED · BAMLH0A0HYM2EY · 2025-06-23). That compression in high-yield is a useful signal. Credit markets broadly are not in a risk-off posture, and non-bank lenders including debt funds and CMBS conduits have priced CRE risk accordingly. When credit spreads are tight, alternative lenders tend to compete more aggressively on terms.
What to Do Now
Borrowers with maturities in the next twelve to eighteen months should be running scenarios now, not at the sixty-day mark. The right structure depends on asset type, NOI trajectory, intended hold period, and how much rate variability the business plan can absorb. Those variables interact in ways that make generic advice unhelpful.
The curve shape today creates a genuine decision point. The short end has moved lower; the long end has moved higher. Which direction that cuts for a given borrower depends on whether they are refinancing into floating or fixed, and over what term. Borrowers who work through this analysis early tend to have more lender options, more time to negotiate, and better outcomes. Borrowers who wait until three months before maturity are typically accepting whatever the market is offering that week.
Barrow Street Advisors works with borrowers on refinancings, acquisitions, and capital structure decisions across the US, UK, and Europe. If you have a maturity approaching or are evaluating your options in the current rate environment, our team is available to work through the analysis with you.