The most recent Commercial Delinquency Report from the Mortgage Bankers Association (MBA) shows that commercial mortgage delinquencies rose in Q1 of 2025.
“Commercial mortgage delinquencies rose across all major capital sources in the first quarter of 2025, reflecting growing pressure on certain property sectors and loan types,” said Reggie Booker, MBA’s Associate Vice President of Commercial Real Estate Research. “While delinquency rates remain relatively low for most investor groups, the uptick in CMBS delinquencies signals heightened stress in parts of the market that lack refinancing options or other challenges.”
The top five capital sources—commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac—are examined in MBA’s quarterly research of commercial default rates.
Collectively, these investors own about 80% of the outstanding debt from commercial mortgages. Each capital source’s metrics for monitoring loan performance are included in MBA’s analysis. Delinquency rates are not directly compared between groups since each tracks delinquencies differently. For instance, Freddie Mac does not include loans that are in payment forbearance provided the borrower is adhering to the forbearance arrangement, but Fannie Mae classifies such loans as delinquent.
Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the first quarter of 2025 were as follows:
- Banks and thrifts (90 or more days delinquent or in non-accrual): 1.28 percent, an increase of 0.02 percentage points from the fourth quarter of 2024;
- Life company portfolios (60 or more days delinquent): 0.47 percent, an increase of 0.04 percentage points from the fourth quarter of 2024;
- Fannie Mae (60 or more days delinquent): 0.63 percent, an increase of 0.06 percentage points from the fourth quarter of 2024;
- Freddie Mac (60 or more days delinquent): 0.46 percent, an increase of 0.06 percentage points from the fourth quarter of 2024; and
- CMBS (30 or more days delinquent or in REO): 6.42 percent, an increase of 0.64 percentage points from the fourth quarter of 2024.
Although they are frequently backed by single-family residential development projects rather than income-producing properties, construction and development loans are included in many regulatory definitions of “commercial real estate” even though they are typically not included in the numbers presented in this report. Loans secured by owner-occupied commercial properties are included in the FDIC delinquency rates for bank and thrift-held mortgages that are presented here.
Appendix A lists the differences between the delinquent metrics.
To read more, click here.
