What the Market Looks Like This Week
SOFR printed at 4.31% as of May 14, down eleven basis points from the late-April spike that briefly pushed the index to 4.42% after the Treasury auction noise. That drop matters: at this spread environment, eleven basis points is real money on a $4M bridge loan — roughly $4,400 annually, or about one draw-inspection fee per month. Note it, but don’t celebrate it. The index is still 80 bps above where most operators underwrote their 2024 originations.
The rate-environment story this week is less about SOFR and more about lender behavior. According to the MBA’s most recent commercial/multifamily originations data, bridge volume is running approximately 14% below the same period in 2025. That contraction is not evenly distributed. Debt funds with warehouse lines tied to regional banks are pricing wide and requiring full recourse carve-outs plus guarantor liquidity tests at 10% of loan amount. Private REITs that have been running capital raises are pricing tighter but adding origination friction — longer commitment periods, conditional term sheets, rate locks that require a 50-bps fee to hold past 30 days.
Regional banks, the ones still playing, are the most interesting bucket. Two quotes I reviewed this week came from banks in the $5–12B asset range. Both were sub-SOFR+300. Both had prepayment lockouts disguised as “exit fee” language in sections of the commitment letter most borrowers skip.
Here are the week’s quotes, anonymized by unit count, MSA, vintage, and lender archetype.
This Week’s Quotes
Deal 1 — 18 units / Indianapolis MSA / 1971 vintage / 75% LTC Lender: Regional bank (Midwest, $7B assets) Rate: SOFR + 265 Origination: 1.25 pts Extension: 0.50% per 6-month extension, two available Prepay: None stated — but 1.0% exit fee on any payoff within 18 months of origination Draw schedule: Monthly, inspector required, 10-day funding lag
The exit fee is doing the work here that a prepay structure would do elsewhere. If you’re targeting a 14-month value-add and agency take-out, you’re paying that 1.0% plus the origination point, plus the inspector lag eats one draw cycle on a $1.1M rehab budget. All-in cost of capital is probably 9.4% annualized against a 14-month hold. Not terrible for Indianapolis, but not what the headline SOFR+265 implies.
Deal 2 — 32 units / Memphis MSA / 1983 vintage / 70% LTC Lender: Debt fund (mid-size, ~$800M AUM, Southeast focus) Rate: SOFR + 340 Origination: 2.0 pts Extension: 0.75% per 6-month extension, one available Prepay: 2-1-1 step-down starting at month 13 Draw schedule: Bi-monthly, inspector + title update required, 14-day funding lag
Memphis continues to price at a spread penalty. Two debt funds and one private REIT all added 15–25 bps to Memphis relative to comparable Nashville product this week, citing Trepp’s bridge loan surveillance data showing elevated delinquency rates in Tennessee secondary markets on 2022–2023 vintage bridge paper. The 2-1-1 prepay starting at month 13 is reasonable if your take-out is month 18–24. If you’re trying to hit a Freddie Small Balance execution at month 16, you’re eating a 2% prepay on the bridge payoff plus Freddie’s own modest defeasance structure. Model that before you sign.
Deal 3 — 9 units / Denver MSA / 1962 vintage / 65% LTC Lender: Private REIT (national platform, known for small-balance execution) Rate: SOFR + 310 Origination: 1.5 pts Extension: 0.50%, two available Prepay: Open after month 12 Draw schedule: Monthly, no inspector required under $50K per draw, 7-day lag
Cleanest draw process of the week. The sub-$50K inspector waiver matters on a 9-unit deal where individual draw requests are $30–45K — you’re saving $800–1,200 per draw in inspector fees plus two weeks of float. At 65% LTC on a 1962 Denver asset, the lender is comfortable with the vintage because the ARV math works in a market where rents held through Q1 2026 per Fannie Mae’s most recent multifamily commentary. Open prepay after month 12 is clean. The rate is fair. This is a workable quote.
Deal 4 — 44 units / Cleveland MSA / 1978 vintage / 78% LTC Lender: Debt fund (large-format, ~$2.5B AUM, resembles a national platform) Rate: SOFR + 385 Origination: 2.5 pts Extension: 1.0% per 6-month extension, two available Prepay: Locked for 12 months, 3-2-1 thereafter Draw schedule: Monthly, inspector required every draw, 10-day lag
78% LTC on a 1978 Cleveland asset is the lender taking a position, and the pricing reflects that. The 3-2-1 prepay structure starting at month 13 combined with a 12-month lockout means if your rehab runs hot and your take-out lender wants to close at month 15, you’re paying 3 points on a $3.2M bridge balance — roughly $96,000 — to exit. That’s a line item that should appear in your deal model next to the rehab contingency, not buried in a prepay schedule you negotiate away from.
The 2.5-pt origination on a $3.2M loan is $80,000 at close. Total friction at close plus a 15-month exit: $176,000 against a deal where your projected value-add spread is probably $280–340K. The math still works, barely, but there’s no room for a cost overrun.
Deal 5 — 22 units / Kansas City MSA / 1969 vintage / 72% LTC Lender: Regional bank (Plains-state footprint, $9B assets) Rate: SOFR + 285 Origination: 1.0 pt Extension: 0.375% per 6-month extension, two available Prepay: 1-1-0 step-down starting month 7 Draw schedule: Bi-monthly, inspector required, 12-day lag
Tightest spread of the week. The bank is doing this because they know the sponsor and have an existing depository relationship — if you’re coming in cold, add 30–40 bps to the spread and 0.5 pts to origination. The 1-1-0 prepay is borrower-friendly. The 12-day draw lag on bi-monthly draws is the catch: on a 22-unit rehab running $6,500/unit, you’re managing cash flow timing carefully. One delayed draw cycle when your GC needs a payment is a relationship problem, not just a float problem.
Deal 6 — 58 units / Phoenix MSA / 1985 vintage / 73% LTC Lender: Private REIT (West Coast-based, known for desert Southwest volume) Rate: SOFR + 320 Origination: 1.75 pts Extension: 0.625%, two available Prepay: Open after month 18 Draw schedule: Monthly, inspector required, 7-day lag
Phoenix pricing has compressed 20–25 bps from six weeks ago as a handful of operators who froze in Q1 amid rate volatility came back to market. The REIT is absorbing that demand by holding spread but adding an 18-month open-prepay window — longer than the 12-month window the same lender archetype was quoting in Q4 2025. That extra six months of lockout is a negotiating point. Push back. Three of the five Phoenix quotes I reviewed had open-prepay language that moved to month 15 on pushback with no spread concession required. The 7-day draw lag is the best in this asset class.
Deal 7 — 12 units / Pittsburgh MSA / 1958 vintage / 68% LTC Lender: Debt fund (small-format, $150M AUM, Pennsylvania footprint) Rate: SOFR + 355 Origination: 2.0 pts Extension: 0.75%, one available Prepay: 2-1 step-down starting month 7 Draw schedule: Monthly, inspector required every draw, 14-day lag
The 1958 vintage and Pittsburgh MSA combination is pricing exactly where you’d expect. The single extension option is the risk flag here: if your rehab runs to month 20, you need a 6-month extension, but you only have one available. That means a maturity extension negotiation with a small debt fund mid-deal — a counterparty risk conversation you don’t want to have when your GC is three units from completion. On a deal this vintage in this market, get two extension options in writing or walk.
By the Numbers — Week of May 12
| Metric | Range This Week | vs. 4 Weeks Ago |
|---|---|---|
| SOFR index | 4.31% | +0 bps (from 4.31%) |
| Bridge spread range (multifamily) | SOFR+265 to SOFR+385 | +10 to +15 bps at top end |
| Origination pts range | 1.0 to 2.5 pts | Unchanged |
| Draw-funding lag range | 7 to 14 days | Unchanged |
| Prepay open-window range | Month 12 to Month 18 | Month 18 is new high |
What’s Spiking and Why
Extension fee creep is the story. Six of the seven deals quoted above carry extension fees between 0.375% and 1.0% per period, and three of them have moved higher than what the same lender archetype was quoting in Q4 2025. This is a quiet margin-recovery mechanism. A 1.0% extension fee on a $3M loan is $30,000 for a 6-month term extension — equivalent to adding roughly 200 bps to your effective rate for that extension period. It doesn’t appear in your origination-day cost model unless you explicitly stress-test a delayed take-out scenario.
The other spike: guarantor liquidity requirements. Three debt funds this week added language requiring guarantors to maintain liquid assets equal to 10% of the loan amount for the full loan term — not just at origination. That’s a covenant, not a qualification threshold. Violating it is a technical default. Read Section 9 of any commitment letter you receive this month.
On the take-out side, Fannie Mae’s multifamily originations volume for Q1 2026 came in softer than expected, which is putting modest pressure on Freddie Small Balance execution timelines. If your bridge-to-agency thesis assumes a 90-day agency close, build in 120 and stress-test 150.
What to Watch Next Week
The 10-year Treasury has been hovering in the 4.55–4.68% range all month. Any print above 4.75% — possible if next week’s retail sales data surprises — will widen spreads at the debt fund level within 48 hours. Regional banks will lag by a week or two but will follow. If you’re in a rate-lock negotiation right now, the 50-bps lock fee being quoted by two private REITs is worth paying if your commitment period extends past June 1.
Watch Memphis and Birmingham specifically. The delinquency data from 2022–2023 vintage bridge loans in those markets is working its way through lender credit committees. Two lender archetypes that were active in those MSAs 18 months ago are quietly pulling back. If your deal is in one of those markets and your current lender gets cold, the fallback universe is thinner than it was in January.
Finally: if you received a term sheet this week with “exit fee” language and no explicit prepay schedule, those two things are not the same instrument and they are not mutually exclusive. Read the commitment letter as if both apply. Because in at least two cases I reviewed this week, they do.