U.S. commercial mortgage delinquencies declined modestly in the third quarter of 2025, signaling a slight rebound after a surge in the prior quarter, according to the Mortgage Bankers Association’s latest Commercial Real Estate Finance (CREF) Loan Performance Survey. The report shows that while overall delinquencies have eased, they remain elevated compared to early 2025 levels, reflecting ongoing pressure in parts of the commercial property sector.
“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. “Year-to-date, delinquencies remain high compared with the first quarter, driven largely by later-stage delinquencies and Foreclosure/REO properties. Investors should continue monitoring this segment closely amid broader economic uncertainty.”
The proportion of commercial loans classified as non-current fell during Q3, though results varied by property type. Delinquency rates rose for multifamily and healthcare loans, while office, retail, industrial, and lodging sectors saw improvements. The office market—previously the biggest drag on performance—showed modest progress as leasing stabilized in several major metros.
Among major funding sources, commercial mortgage-backed securities (CMBS) continued to post the highest delinquency levels. Roughly 5.66% of CMBS loan balances were 30 days or more past due, up from 5.14% in the second quarter. This segment remains the most exposed to valuation declines and refinancing challenges.
Other capital sources maintained more stable delinquency rates:
- Life company loans: 1.45% delinquent, down from 1.40%
- GSE loans: 0.64% delinquent, nearly unchanged from 0.61%
- FHA multifamily and healthcare loans: 0.79% delinquent, down from 1.04%
While third-quarter results show commercial mortgage delinquencies easing slightly, the persistence of distress in select property types—especially older office and healthcare assets—underscores the uneven nature of the recovery. Analysts note that refinancing challenges could reemerge in early 2026 if interest rates remain elevated and investor sentiment stays cautious.
