Throughout 2009, multifamily borrowers enjoyed sub-6 percent rates from Fannie Mae and Freddie Mac, as other commercial real estate sectors struggled to find well-priced debt. But if current trends hold up, those rates may be tough to find in 2010.

The government-sponsored enterprises (GSEs), which offered 10-year fixed-rate loans in the mid-5 percent range throughout most of 2009, are now pricing loans at about 6 percent.

The increase is due to the yield on the benchmark 10-year Treasury, which has risen about 60 basis points since the end of November, from 3.2 percent to 3.8 percent today. “Rates on both the affordable and market-rate sides have jumped dramatically over the last 40 days,” says Byron Steenerson, president of Seattle-based Fannie Mae lender Alliant Capital.

While the transaction market continues to be sluggish, the rate increase could further stall the market’s recovery. “With each rate increase, deals stop working on the acquisition side,” Steenerson says. “And the amount of borrowers choosing to refinance goes down because it becomes less appealing.”

This may only be the beginning of the 10-year Treasury’s rising yield. Many financial institutions that underwrite Treasury auctions, such as Bank of America and Citigroup, are forecasting that 10-year Treasury yields will hit 4.25 percent by the end of the year. Other Treasury dealers, such as JPMorgan and Deutsche Bank, peg the yield higher, at around 4.5 percent by the end of 2010.

Still, the buzz in the lending community is that the GSEs will tighten their spreads in response, sending all-in rates back below the 6 percent mark. And the rising interest rate environment could spur more borrowers to lock their rates now while the getting’s good.

“The consensus I hear is that rates are going to go up, but spreads will tighten,” says Don King, national program director of GSE debt for Boston-based CWCapital. “In theory, higher rates should depress the refi/acquisition market. However, if the general consensus is that rates are going higher, does that mean people will transact now in fear of worsening conditions?”