Company: ABR-PF
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0001253986-25-000014
Chunk: 135

Company: ARBOR REALTY TRUST INC
Filing Date: 2025-08-01
Form: 10-Q
Item: Part I, Item 1
Chunk 135
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 cuts since 2020. Although short-term rates are predicted to continue to decline with additional rate cuts of up to 50 basis points in the second half of 2025, we currently remain in a high-interest rate environment, which could persist longer than anticipated if certain key economic indicators fail to align with the Federal Reserve’s expectations. Although short-term interest rates have declined, long-term interest rates have increased significantly and remain highly volatile since the announcement of the current administrator’s imposition of increased tariffs and macroeconomic uncertainty. Since September 2024, the 5-year and 10-year interest rates have increased substantially, with the 10-year rate moving from a low of approximately 3.60% in September 2024 to a high of approximately 4.80% in January 2025 and has recently fluctuated between 4.25% and 4.50%. Analysts currently hold mixed expectations regarding the future trajectory of long-term rates for the remainder of 2025 due to the uncertainty regarding long-term inflation, fiscal policy, increased federal spending and larger deficits as a result of the recent enactment of the One Big Beautiful Bill Act (“OBBBA”), as described below.

As a result of the significant volatility in rates and the unpredictable impact of the tariff negotiations and the OBBBA, it is very difficult to predict where short and long-term rates will settle for the remainder of the year.

This elevated and unpredictable rate environment has resulted in, and may continue to result in, increased payment delinquencies and defaults, increased loan modifications and foreclosures and declining real estate values of certain asset classes, all of which have impacted, and may continue to impact, our future results of operations, financial condition, business prospects and ability to make distributions to our stockholders. Additionally, this high-interest rate environment has created, and may continue to create, increased headwinds for commercial real estate which has led to decreased origination volumes, especially in our GSE/Agency business in 2025, negatively impacting the ability for borrowers to refinance our balance sheet loans with fixed rate agency products. This environment could also limit our ability to resolve delinquent loans, leading to potential additional foreclosures and REO assets on our balance sheet, all of which could have a further material adverse effect on our future results of operations, financial condition, liquidity and ability to make distributions to our stockholders.

We employ rigorous risk management and underwriting practices to proactively maintain the quality of our loan portfolio and work very closely with borrowers to mitigate potential