Elevated financing costs and “weaker conditions” across various segments of the commercial real estate market led the Mortgage Bankers Association (MBA) to describe commercial and multifamily mortgage performance as “mixed” in the first quarter.
“Commercial mortgage loan performance varied across capital sources during the first three months of the year,” said Reggie Booker, associate vice president of commercial real estate research at the MBA, in a press release accompanying the trade association’s first-quarter commercial delinquency report.
More than 80% of outstanding commercial mortgage debt flows through five capital sources: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies and the government-sponsored enterprises Fannie Mae and Freddie Mac.
While delinquencies notched sustained increases across CMBS and Fannie Mae portfolios, Booker flagged “broader resilience of the market” supported by stable or declining delinquency rates for banks and Freddie Mac.
After flat performance from the third to fourth quarters of 2025, CMBS delinquencies soared 0.7 percentage points higher in the first quarter to land at 7.28%, well above the 5.78% delinquency rate posted at the tail end of 2024.
Commercial mortgage performance at Fannie and Freddie continued to track in opposite directions, with Fannie posting its third consecutive quarter of rising commercial delinquencies.
The 0.06-point recorded in the fourth quarter was followed by a 0.04-point rise in the first three months of this year, pushing Fannie Mae’s commercial delinquency rate to 0.78% by the end of March. Freddie Mac posted a 0.01-point decline, settling its commercial delinquency rate at 0.48%.
“While overall loan performance remains relatively healthy, increases in CMBS and Fannie Mae delinquencies point to continued pressure from higher borrowing costs, refinancing challenges, and weaker conditions in some segments of the commercial real estate market,” said Booker.
Life insurance companies posted a 0.06 percentage point increase over the first to push their commercial delinquency rates to 0.38%, while banks and thrifts posted a first-quarter commercial delinquency rate of 1.24%, a 0.01-point rise.
The MBA clarified in its quarterly report that because each distinct capital source tracks delinquencies “in its own way,” delinquency rates are not directly comparable from one capital source to another.
