Multifamily Loans from Rate Shock Years Show Hidden Stress Article originally posted on Globe St. on April 1, 2026 Risk in the GSE multifamily market is not building evenly. It is concentrated in a narrow window of origination – loans made during the 2022–2023 rate shock – that are beginning to diverge from the broader market. Headline performance remains strong, according to a Trepp report. Delinquencies are minimal, and overall credit quality continues to reflect stable fundamentals. But beneath the surface, vintage-level data reveals early signs of pressure that have yet to translate into observable distress. The clearest signal appears in debt service coverage ratios (DSCR). Across the securitized GSE multifamily universe, DSCR remains broadly healthy, with 22.94% of balances below 1.40x. However, loans originated in 2022 and 2023 show a materially higher concentration of weaker coverage, with more than 32% below that threshold. More recent vintages are closer to 20%, reinforcing that this is a discrete vintage effect rather than a gradual shift in underwriting. The divergence is more pronounced at the lowest end. Loans with DSCR below 1.0x are most concentrated in the 2022 vintage, indicating where pressure is most likely to surface first if operating conditions weaken. Delinquencies remain low across all cohorts, suggesting these differences are forward-looking rather than reflective of current distress. Higher leverage is often an explanation for weaker DSCR in most CRE sectors. In this case, it isn’t, according to Trepp. The 2022–2023 vintages — those with the weakest coverage — also have the most conservative leverage profiles. The share of loans originated below 70% LTV rises sharply in these years, while higher-leverage exposure declines to near negligible levels. The cohorts with the most pressure on cash flow are also those with the greatest borrower equity at origination. This inversion shifts the focus from underwriting to timing, according to Trepp. Both fixed- and floating-rate loans in these vintages originated during a period of rapid rate increases. Floating-rate loans reset off SOFR, while fixed-rate debt is tied to the 10-year Treasury. As both benchmarks moved sharply higher between 2021 and 2023, borrowing costs increased accordingly. The 2022 vintage includes a spike in floating-rate exposure, increasing sensitivity to rate resets. By 2023, floating-rate exposure had declined, but fixed-rate coupons had already repriced upward, with a growing share of loans above 6% and a sharp decline in low-rate debt. As such, DSCR compression in these vintages is rate-driven, not leverage-driven. Even with lower loan proceeds, higher borrowing costs reduced available coverage. With stronger equity positions, the primary risk is not credit loss, but cash flow pressure. Borrowers may have the capacity to absorb losses, but thinner margins leave less room to navigate rising expenses or slowing income growth. For that reason, DSCR remains the most informative forward-looking indicator, Trepp said. Recent vintages are not signaling imminent distress, but they are structurally positioned to experience pressure earlier than other cohorts if conditions deteriorate.