A widely cited tracker of commercial real estate market health indicated the commercial mortgage-backed security (CMBS) delinquency rate declined in February by a modest 33 basis points to land at 7.14%.
That figure is 84 basis points higher than the 6.3% delinquency rate one year ago but is an improvement from the 7.29% rate in August and 7.47% rate posted just last month.
That improvement reflects a net decrease in overall delinquent loan balance, driven by modifications and extensions executed for five large office loans and four large mall loans, according to Trepp, a commercial real estate analytics firm.
In the company’s monthly CMBS delinquency report, analysts noted that three of the five major property types declined (office, retail and multifamily) while two increased (industrial and lodging).
The office lending sector pulled back from January’s all-time high delinquency rate of 12.34%, according to Trepp, falling 114 basis points to 11.2%. Retail delinquencies fell 74 basis points to 6.3%, marking that sector’s best reading since posting a 6.21% mark in August 2024.
Industrial delinquencies remained low at 0.67%, compared to a December 2025 high of 0.8%, while lodging delinquency rates rose nearly 40 basis points over the month to 5.94% in February, below the sector’s April 2025 peak of 7.85%.
Multifamily loan performance improved in February, as that sector’s delinquency rate fell nine basis points to 6.85%, below an October 2025 high of 7.12%.
Commercial mortgage volumes ended 2025 more robust across the board, according to Mortgage Bankers Association projections, which showed the multifamily mortgage market grew by nearly 15% to exceed $330 billion in 2025 and is projected to grow by another 20% to around $400 billion in 2026.
Commercial lending was 30% higher over the year in the fourth quarter and 25% higher than in the third quarter, with fourth-quarter multifamily activity up 22% annually by dollar volume.
Despite softening rent growth and climbing vacancy rates, Fannie Mae and Freddie Mac increased their multifamily purchase caps last fall in anticipation of continued expansion in the multifamily segment in 2026.
Trepp also noted that if so-called “performing matured balloon” loans were included — meaning loans past maturity but current on interest — the overall delinquency rate would have been 8.75% in February, down 39 basis points from January. Trepp said this reflects “the influence of maturities on overall CMBS performance.”
The overall CMBS 2.0 delinquency rate, which only includes commercial mortgages originated after the 2008 financial crisis under new regulatory and underwriting frameworks, fell to 7.05% last month from 7.38% in January, still well higher than 6.18% a year ago.
