As we head into the final quarter of 2025, the rate picture is clearer than it's been in two years. The Fed is done cutting for now, the long end of the curve is finally behaving, and investor financing costs are stabilizing. Here's what it means for your next deal.

The Fed's 2025 Arc

After cutting 75 bps through the first half of 2025, the Fed has paused. The economy is running warmer than they'd like, labor markets are tighter than they want, and the remaining inflation stickiness — shelter, services — isn't responding to rate cuts. Expect holds through the end of the year.

What This Means for Investor Rates

Bridge Loan Rates

Private credit has compressed spreads meaningfully in 2025. Bridge rates that were 11-12% in late 2023 are now 9-10.5% on standard fix-and-flip deals. Origination points have stabilized at 2-2.5.

DSCR Rates

30-year fixed DSCR rates in Q4 2025 are typically 7.25-8.25% depending on LTV, DSCR ratio, and credit. Down from 8-9% a year ago. Interest-only DSCR products are pricing 0.25-0.5% lower.

Conventional Investment Rates

Investment-property conventional rates are pricing 6.75-7.5% for 30-year fixed with 25-30% down. The spread over owner-occupied has stayed in the 0.75-1% range.

Where Pimlico Is Pricing

Our Q4 2025 bridge rates start at 9.25% for experienced borrowers with strong credit. DSCR rates start at 7.35% for 65-70% LTV, 740+ FICO, 1.25+ DSCR. Lock windows remain 30-45 days.

The 10-Year Treasury: The Real Driver

DSCR rates track the 10-year Treasury, not the Fed funds rate. The 10-year has hovered around 4.1-4.4% for most of 2025. For rates to meaningfully drop, the 10-year needs to get below 3.75% — which probably requires weakness in employment or growth data, neither of which we're seeing.

Implications for Strategy

  1. Don't wait for rates to drop. If your deal works at today's rates, close it. Trying to time rates costs more deals than it saves.
  2. Lock vs. float. With rates stable, locking is low-risk. Don't over-optimize.
  3. Refinance math has shifted. Cash-out refis that didn't pencil in 2024 may pencil now at 50-75 bps lower.
  4. IO products gain appeal. With rates elevated, IO DSCR improves cash flow enough that it's worth the higher long-term cost for many investors.

What to Watch in Q1 2026

If you want to keep it simple: today's rates are your rates. Underwrite deals at these rates. Anything better that comes later is a bonus.

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