Multifamily Investor Market Update

September 24, 2025

Rates at Multi-Year Lows

Government of Canada bond yields, the benchmark for fixed-rate financing, remain near the bottom of their 52-week range. The 5-year sits at 2.75% and the 10-year at 2.97%. Lower bond yields translate directly into lower mortgage rates for apartment buyers. Mortgage bond spreads are very tight, just 11 basis points on the 5-year and 28 on the 10-year. This indicates strong institutional demand for Canadian mortgage bonds. The result is lower all-in borrowing costs for investors. Thanks to low bond yields and tight spreads, insured financing is available at 3.99% for a 5-year term and 4.09% for a 10-year. With apartment cap rates generally in the 4.5% to 5.5% range, investors are benefiting from positive leverage and healthy cash flow spreads.

Bank of Canada Rate Cuts

The overnight rate has fallen to 2.50%, and prime sits at 4.70%, which is about 175 basis points lower than a year ago. This easing credit cycle provides relief to borrowers with floating-rate debt, which include construction and bridge loans typically used when repositioning or renovating apartments.

Market Fundamentals

Rents continue to rise, with BC’s rental index recently showing a 6% increase year-over-year. Nationally, CMHC reports housing starts at just 249,000 units annually, well below the level required to meet population growth and immigration-driven demand. High construction costs are further limiting new supply, supporting continued rent growth and occupancy stability. The TSX REIT Index is up ~11% year-over-year, signaling capital flows back into Canadian real estate. The Canadian dollar, at roughly 74 cents USD, makes Canadian assets attractive to foreign buyers, adding competitive pressure on property values.

The Opportunity

In our opinion, Fall 2025 presents a a considerable opportunity with borrowing costs below 4%, cap rates still higher than debt costs, strong rental fundamentals, and renewed market confidence. For apartment investors, this creates a compelling window to acquire income-producing assets with long-term upside.