[10/4] The Current State of US Real Estate Loan Delinquencies: Offices, Banks, and Housing｜RECAST [keizai] NEWS (聞く経済ニュース)
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Among US commercial real estate securitized loans, the delinquency rate for offices reached 12.00% in August, marking over a year of levels exceeding the post-financial crisis peak. The primary cause of delinquency has shifted from deteriorating property income to the inability to refinance loans reaching maturity. Mortgage rates rose to 7.28% in October, a level not seen in about three years. On the other hand, the ratio of non-performing commercial real estate loans at banks is improving, and mortgage delinquency rates are also lower than pre-pandemic levels. We will explain the current state of US real estate loan delinquencies, expanding the scope from commercial to banks and housing.
Office Delinquency Rate
In early September, commercial real estate research firm Trepp released the August delinquency rate for commercial real estate securitized loans. Commercial real estate securitized loans are known as CMBS, which are products that bundle loans for properties such as offices and commercial facilities into securities to be sold to investors. The delinquency rate refers to the ratio of loans for which payments are 30 days or more overdue.
CMBS Delinquency Rate – August
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Overall 7.85%, down 0.01 percentage points from the previous month
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Office 12.00%, up 0.09 percentage points
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Multifamily 7.69%, unchanged
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Lodging 5.84%, up 0.49 percentage points
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Retail 7.20%, up 0.24 percentage points
The overall delinquency rate is up from 7.29% a year ago, having reached 7.86% in July. Logistics facilities remained at a low level of 1.14%. The delinquency situation varies significantly depending on the type of property, with offices standing out as having a notably high rate.
Trends in Office Delinquency Rates
The office delinquency rate exceeded the post-financial crisis peak in December 2024 and recorded its highest level since tracking began in 2000 in January 2026. Since then, it has hovered between the high 11% range and around 12%. This means that levels exceeding the post-financial crisis peak have persisted for over a year.
Real estate data firm CRED iQ reports the August office delinquency rate at 13.2%, a figure that includes loans that are continuing to make interest payments even after maturity. In reports from September, they indicated that the office delinquency rate had exceeded 14%. Because the scope and definitions of the data differ, these figures cannot be simply compared with those from Trepp.
Changes in the Nature of Delinquencies
Looking at the content of the delinquencies, it is clear that the nature of the problem is changing.
Content of Delinquencies
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66% of new delinquencies in July were loans that could not be repaid at maturity
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9.81% delinquency rate in August, including loans past maturity that continue to pay interest
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11.42% special servicing rate in August, the highest level since February 2013
Commercial real estate loans often involve paying interest during the term and repaying the principal in a lump sum at maturity. At maturity, the principal is typically repaid by refinancing into a new loan.
Trepp states that many of the large loans that became newly delinquent in July were due to the difficulty of refinancing rather than the performance of the properties. In a situation where office values have fallen and interest rates have risen, there is an increasing number of cases where loans reaching maturity cannot be refinanced.
The special servicing rate is the ratio of loans transferred to specialists in problem resolution. In addition to the delinquency rate, the special servicing rate is also rising, increasing the burden of handling problem loans.
On the other hand, in the September data released by rating agency KBRA on September 30, the overall delinquency rate was 7.7%, almost flat from the previous year. The combined ratio of office delinquencies and special servicing was 17.6%, a slight decrease from 17.8% in August as some problem loans were resolved. The situation is not deteriorating unilaterally.
The Maturity Wall
As the primary cause of delinquency shifts to maturity, the scale of loans reaching maturity in the future is becoming the focus.
Commercial Real Estate Loans Reaching Maturity
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$875 billion in total commercial loans in 2026
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$957 billion in total commercial loans in 2025
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Approximately $100 billion in CMBS in 2026
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Approximately $39 billion in office CMBS over the next 12 months
The overall figures are from the Mortgage Bankers Association, the CMBS figures are from Morningstar DBRS, and the office figures are from CRED iQ.
CMBS Maturity Repayment Rate
In January, the rating agency Morningstar DBRS stated that more than half of the CMBS maturing in 2026 are highly likely to be unable to be repaid at maturity. The repayment rate at maturity is expected to drop significantly from the over 80% seen three years ago.
According to Trepp, as of February, approximately $25 billion in CMBS had passed their maturity dates without being repaid, disposed of, or formally extended. This is at a level not seen since the period of processing following the financial crisis.
Loans that had their maturity dates extended while waiting for interest rates to fall are now reaching their deadlines.
https://therealdeal.com/national/2026/02/17/cmbs-delinquencies-hit-record-with-25b-past-maturity/
Discrepancy with interest rate assumptions
The rise in long-term interest rates is intensifying the difficulty of refinancing.
At the beginning of 2026, the Mortgage Bankers Association predicted that the 10-year Treasury yield would hover around an average of 4.2% in 2026. The actual 10-year Treasury yield was around 5.2% in early October, which is about 1 percentage point higher than the assumption.
If the interest rate for refinancing is higher than assumed, the interest payments after refinancing will increase, making it difficult to cover them with the property’s income. Refinancing loans that have reached maturity has become even more difficult due to the rise in interest rates.
Trepp’s Head of Research, Stephen Buschbom, stated the following at the beginning of the year:
We expect 2026 to be the peak, and from 2027 onwards, the market will head toward normalization and the processing of distressed loans will progress.
This view was formed before the interest rate assumptions changed significantly. The rise in long-term interest rates could also affect the outlook for the timing of the peak in delinquencies.
Multifamily housing
Rental multifamily housing is classified as commercial real estate in US statistics.
Multifamily Delinquency Rates
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CMBS Multifamily August 7.69%
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Bank Multifamily Loans April-June Quarter 1.41%
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Bank Multifamily Loans January-March Quarter 1.47%
While the delinquency rate for CMBS multifamily properties remains at a high level, the delinquency rate for multifamily loans held by banks is improving.
According to CRED iQ, the bank rate of 1.41% is approximately 6.7 times the 2019 low, but it remains significantly below the 5.90% peak seen during the financial crisis.
CMBS and banks differ in the types of properties they cover and their lending terms, leading to significant differences in delinquency levels. When evaluating multifamily delinquencies, it is necessary to distinguish which aggregate figure is being referenced.
Bank Commercial Real Estate Loans
In late August, the Federal Deposit Insurance Corporation released the banking industry aggregates for the April-June quarter.
Bank Commercial Real Estate Loans April-June Quarter
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Delinquency and Non-accrual Ratio for Banks with Assets Over $250 Billion: 3.08%
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Duration of Decline: 7 Consecutive Quarters
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Peak: July-September 2024 Quarter 4.99%
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Pre-COVID Average: 0.59%
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Balance of Delinquent and Non-accrual Loans: Down $2 Billion from Previous Quarter, a 8.9% Decrease
The scope covers commercial real estate loans for investment purposes where the owner does not occupy the property. The ratio for large banks has declined for seven consecutive quarters, dropping by approximately 2 percentage points from its peak. However, it remains at a high level compared to the pre-COVID average.
The Federal Deposit Insurance Corporation evaluates the banking industry as follows.
