The Treasury spread is the credit premium added to the matching Treasury yield to set a fixed CRE loan rate. Spreads vary by lender type, asset class, term, leverage, and capital markets conditions.
How is the matching Treasury chosen?
Lenders match the Treasury to the loan term. A 10-year fixed loan prices off the 10-year Treasury; a 7-year fixed loan prices off the 7-year. For loans with a balloon and a longer amortization, the matching Treasury is the loan term, not the amortization period.
What drives spread differences across lender types?
Agency multifamily prices tightest because of the implicit government backing. Life companies and CMBS price next, varying by asset and structure. Banks and debt funds carry wider spreads in exchange for flexibility (recourse vs. non-recourse, shorter terms, structured features). Bridge debt is priced off SOFR plus a spread, not Treasuries.
Sources
- Daily Treasury Par Yield Curve Rates · U.S. Department of the Treasury · daily
- Treasury Constant Maturity Series (DGS5, DGS10) · Federal Reserve Bank of St. Louis (FRED) · weekly