The improvement offered some relief to lenders and investors, though pockets of distress remained
Delinquency rates for commercial property mortgages eased in the third quarter of 2025, following a sharp rise earlier in the year, according to the Mortgage Bankers Association’s (MBA) latest CREF Loan Performance Survey.
While the overall picture improved, industry leaders cautioned that pockets of risk remain—particularly among commercial mortgage-backed securities (CMBS) and certain property types.
“After significant increases in the second quarter, delinquency rates declined in the third quarter,” said Judie Ricks, MBA’s associate vice president of commercial real estate research.
“Compared to the first quarter, third-quarter delinquency rates were up, driven by increases in later stage delinquencies and Foreclosure/REO properties. It is worth watching this portion of the market the rest of the year amidst broader economic uncertainty,” Ricks said.
The MBA survey, which covered $2.8 trillion in loans as of September 30 and represented 57% of the total commercial and multifamily mortgage debt outstanding, found that the share of loans not current fell from the previous quarter. However, the data revealed a mixed picture across property types and capital sources.
CMBS delinquencies rise as other sectors stabilize
Among capital sources, CMBS loans continued to show the most stress. The share of CMBS loan balances 30 days or more delinquent climbed to 5.66% in Q3, up from 5.14% in Q2.
By contrast, delinquency rates for life company loans edged up to 1.45% from 1.40%, while government-sponsored enterprise (GSE) loan delinquencies remained nearly flat at 0.64%. FHA-insured multifamily and health care loan delinquencies dropped from 1.04% to 0.79%.
Property type performance diverged
The survey highlighted that while office, retail, industrial, and lodging properties saw improvements, multifamily and health-related loans experienced a rise in delinquencies.
This divergence echoes broader industry concerns about the uneven recovery in commercial real estate, especially as remote work and demographic shifts reshape demand for office and multifamily assets.
Servicers are facing increased workloads related to loan workouts, modifications, and asset management, especially for properties in late-stage delinquency or foreclosure.
The uneven performance across property types means servicers must tailor strategies for each asset class, with multifamily and health care loans now requiring closer scrutiny due to rising delinquencies.
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