What persistently high bond yields could mean for the commercial mortgage market
Office spreads run 150 to 250 basis points. Multifamily arrears are trending up, and CMHC-insured applications fell from the prior quarter.
“While capital remains available across all asset classes, uncertainty related to geopolitical tensions, trade disruption, and rising bond yields is beginning to reduce borrowing capacity and increase lender caution,” said Ron Dezman, senior vice-president, debt capital and advisory, at Avison Young in Edmonton.
“In the CMHC lending market, underwriting assumptions for rental growth and threshold interest rates are becoming more conservative as supply risk deepens across several markets.”
What higher yields mean for brokers’ commercial clients
Private investors made 48% of third-quarter acquisitions worth $5 million or more, according to CoStar data in the report. Mortgage renewal or maturity ranked as the second-most common reason owners sold multifamily assets.
“For multifamily pricing, bond yields will be the dominant story for the remainder of 2026, as a persistence of higher yields will likely place upward pressure on cap rates, especially with the relatively flat near-term income growth expectations,” said Carey Buntain, principal, capital markets, at Avison Young in Vancouver.
