Apartment Building Owners Face Higher Rates on Loans via National Real Estate Investor

It has suddenly gotten a lot more difficult to borrow money for an apartment property.

“The overall cost of borrowing has gone up undoubtedly,” says Peter Smyslowski, managing director in the San Francisco office of capital services provider HFF. “But the interest rates spreads offered by lenders are very similar to the spreads they offered last year.”

Long-term interest rates rose by well over 50 basis points in the last months of 2016, as the yield on the benchmark U.S. Treasury bonds took off after the victory of Donald Trump in the presidential election. That will make it tougher for borrowers to make deals work. Meanwhile, lenders have not shifted the terms they offer or bent their underwriting requirements to help close deals.

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