The quick read: Choose the SOFR index whose timing you can budget, then make sure your interest rate cap pays on that same index. Daily SOFR reprices overnight: the Office of Financial Research's SOFR series shows 3.62% for September 16, 2026 and 3.85% for September 17, the day after the Federal Open Market Committee raised the federal funds target range by 1/4 percentage point to 3-3/4 to 4 percent. The 30-day average absorbs the same move over about a month. By our arithmetic from the OFR series, it read about 3.65% on September 18, reached 3.75% on October 1 and about 3.89% on October 19. Term SOFR is set ahead of each period from futures prices. No index is cheaper over a full rate cycle; they differ in when you pay. The costlier mistake is basis mismatch: a loan floating on one index and a cap paying on another.
What are daily SOFR, 30-day average SOFR and term SOFR?
Daily SOFR, 30-day average SOFR and term SOFR are three readings of the same overnight Treasury repo market: daily SOFR is each business day's rate, the 30-day average compounds the last 30 calendar days of those rates, and term SOFR is a one-, three-, six- or 12-month rate derived from futures prices.
The Office of Financial Research, which carries the series in its Short-term Funding Monitor, describes SOFR as a rate based on overnight repurchase agreements backed by Treasury securities and published daily by the Federal Reserve Bank of New York. The Federal Reserve's Regulation ZZ (12 CFR Part 253, 2025 edition) defines the other two. It defines 30-day Average SOFR as the 30-calendar-day compounded average of SOFR published by the New York Fed, and CME Term SOFR as the reference rates published for one-, three-, six- and 12-month tenors and administered by CME Group Benchmark Administration. Fannie Mae's Multifamily Guide puts the average in plainer words: a compounded average of SOFR over a specified interest period of 30 days.
For a borrower, the difference is when the coupon is known. A Federal Reserve staff note (April 19, 2019) explains that averaged rates are less volatile than overnight rates and can be calculated from published data, while forward-looking term SOFR rates are derived from transaction prices for SOFR futures. An average looks back at rates already printed; a term rate looks forward at the rates the futures market expects.
SOFR index comparison (publishers per 12 CFR Part 253 and the OFR; readings per the OFR series and our arithmetic):
| Attribute | Daily SOFR | 30-day average SOFR | Term SOFR |
|---|---|---|---|
| Attribute Publisher | Daily SOFR Federal Reserve Bank of New York | 30-day average SOFR Federal Reserve Bank of New York | Term SOFR CME Group Benchmark Administration |
| Attribute What it measures | Daily SOFR One business day of overnight Treasury repo | 30-day average SOFR 30 calendar days of SOFR, compounded | Term SOFR Futures-implied rate for 1, 3, 6 or 12 months |
| Attribute When the coupon is known | Daily SOFR Day by day, as each rate prints | 30-day average SOFR At each reset, from rates already printed | Term SOFR At the start of each period |
| Attribute Reset behaviour after a Fed move | Daily SOFR Moves the next business day | 30-day average SOFR Catches up over about 30 days | Term SOFR Moves when futures reprice, which can be before a meeting |
| Attribute Reading on date | Daily SOFR 3.88% for October 20, 2026 (OFR) | 30-day average SOFR About 3.89% dated October 20, 2026 (our arithmetic) | Term SOFR Not quoted here; read it on your term sheet |
How fast did each index pass through the September 2026 hike?
Daily SOFR passed the September 2026 hike through overnight, rising from 3.62% to 3.85% between September 16 and September 17, while the 30-day average needed about a month: by our arithmetic from the Office of Financial Research series, it read about 3.65% on September 18, 3.75% on October 1 and 3.89% on October 19.
The rate tape, each figure stamped with its observation date:
Fed decision (FOMC statement, September 16, 2026): raised the target range by 1/4 percentage point to 3-3/4 to 4 percent
Daily SOFR for September 16, 2026 (OFR): 3.62%
Daily SOFR for September 17, 2026 (OFR): 3.85%
Daily SOFR for September 25, 2026 (OFR): 3.90%
Daily SOFR for October 16, 2026 (OFR): 3.88%
Daily SOFR for October 20, 2026 (OFR, read October 21): 3.88%
The 30-day average is not in the OFR series, so we rebuilt it. Our arithmetic compounds each business day's OFR rate for the calendar days it covers, across the 30 calendar days before the date shown, which is the 30-calendar-day compounded average that Regulation ZZ describes. Treat the results as close approximations of the New York Fed's published average, not as the official figure.
Pass-through after the September 16, 2026 hike (daily SOFR per the OFR; 30-day average by our arithmetic):
| Date (2026) | Daily SOFR for that date | 30-day average dated that day | Gap, daily minus average |
|---|---|---|---|
| Date (2026) September 16 | Daily SOFR for that date 3.62% | 30-day average dated that day 3.65% | Gap, daily minus average -0.03 point |
| Date (2026) September 18 | Daily SOFR for that date 3.85% | 30-day average dated that day 3.65% | Gap, daily minus average 0.20 point |
| Date (2026) September 28 | Daily SOFR for that date 3.90% | 30-day average dated that day 3.73% | Gap, daily minus average 0.17 point |
| Date (2026) October 1 | Daily SOFR for that date 3.87% | 30-day average dated that day 3.75% | Gap, daily minus average 0.12 point |
| Date (2026) October 7 | Daily SOFR for that date 3.88% | 30-day average dated that day 3.80% | Gap, daily minus average 0.08 point |
| Date (2026) October 13 | Daily SOFR for that date 3.89% | 30-day average dated that day 3.85% | Gap, daily minus average 0.04 point |
| Date (2026) October 19 | Daily SOFR for that date 3.87% | 30-day average dated that day 3.89% | Gap, daily minus average -0.02 point |
In dollars the lag is real but temporary. On an illustrative $20,000,000 loan, every 0.10 point of index is about $1,667 of interest per 30-day month at Actual/360 (our arithmetic). The 0.20 point gap on September 18 was worth about $3,333 a month to a borrower on the average, and it had closed by mid-October. The same lag runs the other way after a cut: the daily-SOFR borrower gets the relief the next business day, and the average-SOFR borrower waits about a month. Averaging buys time to react, not a lower rate.
What is basis mismatch between a rate cap and the loan?
Basis mismatch is when the loan's coupon floats on one SOFR index while the interest rate cap pays on another, so in a fast move the loan can cost more than the cap's strike while the cap's own index is still below it and pays little or nothing for weeks.
The OCC's Comptroller's Handbook on commercial real estate lending (Version 2.0, March 2022) describes basis risk as arising from imperfect correlations between the indexes used to price a loan and the funding behind it, and notes that when a project has floating-rate debt and fixed rents, rising rates can hurt the borrower's repayment capacity. For a borrower, the cap is the second index.
Here is the September move run through a mismatched hedge. Every input is an illustrative assumption: a $20,000,000 loan floating on daily SOFR, with a cap struck at 3.75% on the 30-day average.
Loan index above the strike (OFR daily SOFR): every day from September 17 through October 16
Interest above the strike over those 30 days (our arithmetic): about $2,122
Cap payments on the 30-day average over the same days (our arithmetic, settled daily for simplicity): about $557
Uncovered (our arithmetic): about $1,565
A quarter-point move makes the hole small. The same structure in a larger, faster move leaves the borrower paying the full increase for weeks while the hedge it bought waits for its index to catch up. The reverse mismatch, a loan on the average and a cap on daily SOFR, bites after a cut: the cap stops paying as soon as daily SOFR falls below the strike, while the loan's average stays above it for about a month.
The Fed's own LIBOR rule shows how easily two contracts on one deal end up on different SOFR indexes. Under 12 CFR 253.4, a covered LIBOR derivative moved to the ISDA "Fallback Rate (SOFR)", a covered non-consumer cash contract moved to CME Term SOFR, and a contract of an FHFA-regulated entity moved to 30-day Average SOFR, each plus a tenor spread adjustment of 0.11448 percent for one-month LIBOR. Our reading: a legacy floating loan and its legacy cap could have converted onto different indexes under the same rule, so pull both confirmations on any converted loan before the cap renews.
Match these five terms in the note and the cap confirmation:
- The index, named and defined the same way
- The reset date and any look-back
- The day count
- The notional amount against the loan balance
- Any rounding or floor applied to the index
Which SOFR index do agency floating-rate loans use?
Agency floating-rate multifamily loans use 30-day average SOFR: Freddie Mac's floating-rate loan sheet (dated 4/26) names 30-day Average SOFR as its pricing index, and Fannie Mae's Multifamily Guide (effective September 28, 2026) sets the same index for its structured ARM loan and writes the required cap on it.
Freddie Mac's floating-rate loan, per the product sheet dated 4/26:
Pricing index (Freddie Mac, 4/26): 30-day Average SOFR
Terms (Freddie Mac, 4/26): 5-, 7- and 10-year
Minimum loan (Freddie Mac, 4/26): $10 million
Early rate-lock (Freddie Mac, 4/26): typically 60 to 120 days from rate-lock until purchase
Cap (Freddie Mac, 4/26): the borrower may obtain its own cap from an approved third-party provider
Sizing (Freddie Mac, 4/26): minimum 1.25x amortizing DCR, with maximum LTV of 75% for terms of 5 to under 7 years and 80% for 7 years and longer, amortizing or partial interest-only; the DCR for interest-only periods uses an amortizing payment
Fannie Mae's structured ARM (SARM) loan, per Multifamily Guide Sections 1101 and 1105 (effective September 28, 2026):
Index (Fannie Mae, Section 1101): 30-Day Average SOFR
Index look-back (Fannie Mae, Section 1101): 1 Business Day before the Rate Change Date
Rate adjustment (Fannie Mae, Section 1101): every month
Minimum loan (Fannie Mae, Section 1101): $25 million
Cap (Fannie Mae, Section 1105): required, minimum 5-year term, bought from a Fannie Mae-approved provider
Cap payment trigger (Fannie Mae, Section 1105): the 30-Day Average SOFR Index above the Cap Strike Rate on the 1st day of the month matching the loan payment date
Replacement reserve (Fannie Mae, Section 1105): at least 110% of the current replacement cap cost if the cap expires before maturity
That is what a matched hedge looks like: one index and one monthly date for both the loan and the cap. It also matters if you plan to refinance a bridge loan into an agency floater. The agency loan resets on the 30-day average, and the cap you bought for the bridge was written for the bridge loan, not the new one. Price the new cap into the refinance budget; our rate cap budgeting guide walks through the arithmetic.
Which SOFR index should you ask for on a bridge or bank loan?
On a bridge or bank loan, ask for the SOFR index whose timing matches how you budget: term SOFR if you must know each payment in advance, the 30-day average if you want a Fed move absorbed over a month, and daily SOFR only if your reserves can carry an overnight jump.
Each choice has a cost the term sheet will not spell out:
- Term SOFR. You know the coupon at the start of each period, which suits an interest reserve and a monthly draw budget. It reprices with futures, so an expected rate change can show up in the rate before a meeting.
- 30-day average SOFR. The coupon lags the market in both directions. It suits a business plan where rents reset slowly, and it is the same index an agency floating-rate takeout uses, so the payment pattern does not change at refinance.
- Daily SOFR. You pay each day's rate, so the full move arrives the next business day and the period's interest is known only after the period ends.
Two pricing checks keep the quotes comparable. First, compare the all-in coupon, index plus spread, on the same date; a spread over term SOFR and a spread over the 30-day average are spreads over different numbers. Second, get the cap quote on the same index and reset date as the note before you accept the term sheet, because the cap is a separate contract and pays on whatever index its confirmation names. The bridge loan carry-cost guide shows how the coupon flows into the total cost of a bridge hold, and the bridge loan page covers the product itself.
How do you get a floating-rate loan placed with the index and the cap matched?
You get a floating-rate loan placed with the index and the cap matched by sending lenders one package that names the index, reset date and cap you want, so every quote prices the same structure and the cap is negotiated alongside the spread instead of bolted on after the term sheet. Our first recommendation, as publisher, is a brokerage.
1. A commercial mortgage brokerage: YieldStack, our pick as the publisher of this guide. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. Its software matches the deal against 20,000+ loan programs and compares the options side by side. Human brokers then structure the request, negotiate the index, spread and cap terms on the borrower's side, and carry the deal toward closing. The median first offer arrives in under an hour, from an institutional lender.
2. Your current lender. A lender that already holds the loan can quote quickly, but one quote on one index gives you nothing to compare it with.
3. Calling lenders one at a time. It works, but each lender quotes its own index and cap terms on a different package, and the quotes rarely line up.
Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
What to send:
- Property details, the rent roll and a trailing 12-month operating statement
- Target loan amount, term, hold period and exit plan
- The index you want (daily, 30-day average or term SOFR) and any look-back
- Your cap budget, or the strike, term and index on an existing cap
- The prepayment terms you can accept
- Any term sheet already in hand, so new quotes line up against it
When the package is ready, send the deal for review. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
The bottom line
The index decides when a rate move reaches your payment, not whether it does. Daily SOFR rose 0.23 point overnight after the September 16, 2026 hike, and the 30-day average took about a month to follow. Pick the timing you can budget, then write the cap on the same index, reset date and day count as the note.