October Market Rate Update
Each month, the IAACU Small Business Team aims to provide you with insights into current trends in commercial real estate market rates, which are influenced by movements in the U.S. Treasury yield.
Treasury Yield Trends: September Softness Continues
Following August’s easing, the 5-year U.S. Treasury yield averaged 3.74% in September, continuing its downward drift from 3.80% in August and 3.92% in July. Daily closes ranged from 3.57% to 3.76%, reinforcing the narrative of softening rate pressure and investor confidence in a stable interest rate environment.
This trend has created a more favorable environment for commercial lending, especially for stabilized assets and strong borrowers.
Commercial Real Estate Loan Rates: Still Attractive, But Watch the Horizon
As of late September, benchmark rates for owner-occupied properties start around 5.94%, with most quality deals falling between 5.99% and 7.10%, depending on asset class and borrower strength. With lenders competing for high-quality borrowers like many of our IAACU members, rates are some of the lowest not seen since 2023, now is a prime time to secure long-term capital before year-end volatility sets in.
Government Shutdown: A New Wild Card in the Deck
On October 1, 2025, the U.S. government officially entered a partial shutdown due to a budget impasse. While historically these events have had muted long-term effects, this shutdown arrives at a critical moment for economic visibility and Fed policy.
- Key economic data releases, such as jobs and inflation figures, have been delayed, leaving the Fed unsure of many key indicators as the October meeting approaches.
- Investor uncertainty has increased, with Treasury yields dipping and gold prices surging as markets look towards more secure options.
- GDP growth could be shaved by 0.15% per week of shutdown, according to Goldman Sachs estimates. ^
"Markets hate uncertainty, and this shutdown is the epitome of it."
The longer the shutdown lasts, the more likely we'll see volatility in rates, delayed lending decisions, and cautious underwriting.
What This Means for You
If you're considering refinancing, expanding, or acquiring commercial assets, now may be the time to act. With rates still favorable and lender competition strong, borrowers can lock in attractive terms before year-end volatility sets in.
"Don't wait for clarity in an uncertain market. Capitalize on stability while it lasts."
Reach out to the IAA Credit Union Small Business Team today to explore tailored solutions that align with your goals.
Read our September Market Rate Update.
*Rates from Resource Center | U.S. Department of the Treasury as of October 6, 2025.
