Lenders want to lend but borrowers still need to start early – a capital markets update for Northwest apartment owners facing 2026 and 2027 maturities.
By Aaron Kirk Douglas
Lenders are eager to put money out and eager to sit still, sometimes in the same conversation. That contradiction is the defining feature of the multifamily financing market right now.
Matt Dzbanek, senior director of capital services at Ariel Property Advisors, a Global Real Estate Advisors (GREA) member firm, described the environment in an interview with HFO partner Greg Frick on Multifamily Marketwatch. Dzbanek places debt and equity nationwide.
More banks are re-entering as loans that sat frozen on bank balance sheets finally roll off, freeing capital. Dzbanek said the slow recovery has less to do with rate levels than with that logjam. Lenders will place money at 3% and at 10%. They cannot lend against capital already tied up.
The spread is not the problem. The index is.
Most quotes land between 175 and 225 basis points over the corresponding Treasury, Dzbanek said, roughly where they have been for two years. The movement has come from the index, not the margin. He pointed to deals that started with all-in rates near 5.75% and now price closer to 6.25% or 6.50% because Treasuries climbed 50 to 75 basis points.
Apartment owners who must transact are absorbing that. Apartment owners who do not are waiting. Dzbanek called the second quarter one of the slower he has seen.
Where the flexibility is
The clearest change is in bridge debt. Two or three years ago a spread of 500 to 600 over was common. Today, for the right deal, Dzbanek said lenders can price in the 200 to 300 range. Some bridge loans now price within 50 basis points of permanent debt.
That is pushing borrowers toward bridge for reasons unrelated to distress. Bridge is non-recourse, closes faster and carries fewer restrictions. When the cost gap narrows to almost nothing, flexibility wins.
Interest only is coming back after a hard stretch from 2023 through 2025, usually one or two years on a five-year term. Prepayment terms have loosened. Proceeds and rates are where lenders hold the line.
The agency picture has changed
Freddie Mac retired its Small Balance Loan program in April and folded small balance lending into its conventional platform. Freddie no longer offers a product below $2 million. Dzbanek called it a shock to the system. Borrowers who were once easy approvals now face far more scrutiny of their management experience. Under $10 million, banks are often just as competitive and easier to work through.
Dzbanek said agency volume is running well below the raised caps, which could make Freddie and Fannie more willing to offer pricing waivers, interest only and other concessions in the second half.
Start earlier than feels necessary
Dzbanek’s most practical advice concerns timing. If a loan matures in the fourth quarter, start now.
He pointed to a deal that signed term sheets Feb. 1 and expected to close four to five months later. Some lenders still close in 60 days, but you do not know in advance which lender will give you the best terms, so you buy time. Volume at lenders is high and closings are not, which adds weeks.
What separates deals that close? Borrowers who have not financed anything in two or three years often stall at the first lender matrix. And a lender sorting hundreds of emails takes a professionally underwritten package seriously and skims the rest.
One more variable
Since this interview the Fed has held its benchmark rate at 3.50% to 3.75% for a fifth straight meeting. The July 29 vote was 9-3, with three regional bank presidents dissenting in favor of an immediate hike.
The detail that matters is at the long end. The 10-year Treasury rose about five basis points on the announcement and the 30-year more than nine, while the two-year fell. That is the pattern Dzbanek described. The spread lenders quote has not moved. The index underneath it has.
Chair Kevin Warsh has also stepped back from forward guidance. Borrowers get less warning than they are used to. That is one more argument for starting early rather than waiting for a signal that may not come.
What it means here
Much of the national conversation is about oversupply, and some lenders have stepped back from markets where deliveries outran demand.
That is not the Portland or Vancouver story. Deliveries across Oregon and Southwest Washington are running well below the pace of the last cycle, which means the imbalance making lenders cautious elsewhere is not the local constraint.
Dzbanek framed the national picture plainly. Every market is a good investment. The question is which problem you would rather manage, heavier regulation or lease-up risk.
For Northwest apartment owners with maturities inside 12 to 18 months, the takeaway is simple. Options require time. Desperation does not price well.
About the author:
HFO Research (Aaron Kirk Douglas) from HFO Investment Real Estate’s Multifamily Marketwatch YouTube podcast, hosted by partner Greg Frick. Aaron Kirk Douglas is director of market intelligence for HFO Investment Real Estate In Portland.Â
