In the first quarter, delinquency rates for mortgages backed by commercial properties increased, according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey.
The survey found that the balance of commercial mortgages that are not current increased slightly in the first quarter of 2025. It also revealed that the share of loans that were delinquent increased for some property types, particularly office and lodging. However, delinquencies decreased for industrial and retail properties, while remaining roughly constant for multifamily properties overall.
Further, among capital sources, CMBS loan delinquency rates saw the highest levels as 5.2 percent of CMBS loan balances were 30 days or more delinquent. That was down from 5.3 percent at the end of last quarter. Also, non-current rates for other capital sources remained moderate. Specifically, 1.0 percent of life company loan balances were delinquent, up from 0.9 percent. Also, 0.6 percent of GSE loan balances were delinquent, up from 0.55 percent the previous quarter, while 1.1 percent of FHA multifamily and health care loan balances were delinquent, up from 1.0 percent the prior quarter.
“The delinquency rate for commercial mortgages increased again in the first quarter of 2025, driven by higher delinquencies on lodging and industrial properties and rising delinquencies on GSE and FHA loans,” Judie Ricks, MBA’s associate vice president of commercial real estate research, said. “MBA is closely watching delinquency trends, as there have been increases in both later-stage and new delinquencies. Economic growth will slow in 2025, which could lead to further increases in mortgage delinquencies through the second half of the year.”
Participants reported on $2.6 trillion of loans in March 2025, representing 54 percent of the total $4.8 trillion in commercial and multifamily mortgage debt outstanding (MDO) relative to the fourth quarter of 2024 MDO report.