Commercial mortgage delinquencies increased in the first quarter of 2026, pointing to building credit pressure across the CRE market.
According to the latest Commercial Real Estate Finance (CREF) Loan Performance Survey from the Mortgage Bankers Association, the overall delinquency rate climbed to 4.02%, up from 3.86% in the previous quarter.
“The data show a gradual but persistent increase in delinquency rates in the overall market,” said Judie Ricks, associate vice president of commercial real estate research at the Mortgage Bankers Association. “In the most recent quarter, there were increases in short-term delinquency for all property types, except industrial, with some of the largest increases coming from multifamily, office, and health care properties.”
CMBS Leads As Stress Builds Unevenly
By capital source, loans backing commercial mortgage-backed securities (CMBS) continued to show the highest levels of distress.
5.21% of CMBS loan balances were 30 days or more delinquent, up from 4.97% in the prior quarter.
Delinquency rates for other capital sources remained lower but moved higher in some cases:
- 1.47% of life company loan balances were delinquent, down slightly from 1.50%
- 0.97% of GSE loan balances were delinquent, up from 0.63%
- 0.96% of FHA multifamily and health care loan balances were delinquent, up from 0.65%
The divergence underscores where stress is most concentrated, particularly among assets financed through capital markets structures and facing tighter refinancing conditions.
Early-Stage Delinquencies Signal Shifting Cycle
“GSE, FHA, and CMBS loans also saw large jumps in early-stage delinquency,” Ricks said. “This is a slight difference from last year — when long-term delinquency rates trended higher — and suggests that the strong market for refinances and modifications in 2025 was conducive to better positioning troubled loans.”
For mortgage bankers, the shift highlights a market increasingly defined by refinancing risk rather than immediate defaults.
A large volume of loans originated in a lower-rate environment is now approaching maturity, and borrowers are facing higher debt service costs alongside lower property valuations, reducing refinance proceeds and increasing the likelihood of extensions or modifications.
At the same time, performance remains highly segmented:
- Office, retail, lodging, and multifamily are seeing rising stress
- Industrial remains more stable
- CMBS continues to concentrate the highest levels of risk
- A gradual credit cycle takes shape
For lenders, that shift could translate into tighter credit conditions, more complex deal structures, and increased scrutiny from capital partners as loans come due.
While delinquency levels remain below historical peaks, the trajectory is clear.
Rather than a sharp downturn, the CRE market is entering a slow-moving adjustment cycle, in which rising rates and refinancing constraints are driving early signs of stress that are likely to intensify through the remainder of 2026.
