Arbor’s Q4 2025 report shows early signs of a shift. After two years of repricing and tightened credit, small multifamily is beginning to stabilize. Asset values rose 1.8% year-over-year, marking the second consecutive quarterly gain. Refinances are back in motion, accounting for 74.2% of originations , the highest share in three years, as borrowers take advantage of early rate cuts and improved terms.
Cap rates held steady at 6.0% for the third straight quarter, while debt yields rose to 9.8%, indicating that lenders still expect strong in-place performance. Loan-to-value ratios dropped to 60.6%, reflecting both tighter underwriting and the shift toward lower-leverage refis. Occupancy remains a standout at 97.3%, and expense ratios declined as operating costs began to ease.
Why It Matters:
This isn’t a return to 2021, but the market is finding its footing. For lenders and brokers, deals are increasingly driven by seasoned assets and strong rent rolls. Buyers still face conservative credit terms, but fundamentals are lining up for more confident execution heading into 2026.
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2/18 - 2/19
