Commercial and Multifamily Mortgage Delinquencies Rise Again as CMBS Stress Deepens

A Second Straight Quarter of Rising Stress

Commercial and multifamily mortgage delinquencies increased in the second quarter of 2025, the Mortgage Bankers Association (MBA) reported on September 11, 2025. It marked the second consecutive quarter of rising delinquencies across most major capital sources, extending a trend that began earlier in the year as property values, rents, and refinancing conditions continued to reshape the commercial real estate landscape.

The headline number came from the commercial mortgage-backed securities (CMBS) market, where the share of loans 30 or more days delinquent or in real estate owned (REO) status climbed to 6.36 percent, up 0.45 percentage points from the first quarter. Every other investor group tracked by MBA also moved, though far more modestly.

Delinquencies by Investor Group

The MBA report tracks commercial and multifamily mortgage performance across five major capital sources. Second-quarter 2025 delinquency rates, and their change from the first quarter, were:

• CMBS (30+ days delinquent or in REO): 6.36 percent, up 0.45 percentage points
• Banks and thrifts (90+ days delinquent or in non-accrual): 1.29 percent, up 0.01 percentage points
• Life insurance companies (60+ days delinquent): 0.51 percent, up 0.04 percentage points
• Fannie Mae (60+ days delinquent): 0.61 percent, down 0.02 percentage points
• Freddie Mac (60+ days delinquent): 0.47 percent, up 0.01 percentage points

Each investor group uses a slightly different definition of delinquency, reflecting the different ways they manage and report troubled loans. That makes direct comparisons between them imprecise, but the direction and magnitude of change within each series is what the industry watches.

CMBS Drives the Story

The CMBS segment once again accounted for the bulk of the quarter's deterioration. Reggie Booker, MBA's Associate Vice President of Commercial Real Estate Research, noted that the largest increase was among CMBS loans and pointed to two property types as the main drivers: multifamily and office.

Office has been the highest-profile source of stress in commercial real estate for several years, as hybrid work arrangements and lower space utilization have weighed on leasing, rents, and valuations. Multifamily, long considered one of the most resilient property sectors, has more recently come under pressure from a combination of elevated interest rates, rapid construction deliveries in some markets, softer rent growth, and rising insurance and operating costs, particularly on loans that were underwritten when rates were far lower.

Booker emphasized that headline numbers mask significant variation underneath, with performance reflecting differences in property type, loan structure, geography, and borrower profile.

Why Bank and Agency Rates Look So Much Lower

The gap between the 6.36 percent CMBS delinquency rate and the sub-1.5 percent rates reported by banks, life insurers, Fannie Mae, and Freddie Mac is striking but not new. It reflects both different definitions of delinquency and different loan mixes.

CMBS pools are largely fixed-rate, fully amortizing or balloon loans on a broad mix of property types, including a significant concentration of office and retail loans that have struggled most in the current cycle. Because CMBS loan performance is reported publicly at the loan level, problems are visible quickly. Life insurance company portfolios tend to be more conservatively underwritten and concentrated in higher-quality assets. Fannie Mae and Freddie Mac primarily finance multifamily rental housing, where underwriting standards, loss-sharing structures, and active asset management have historically kept delinquency low. Banks and thrifts hold a wide range of commercial real estate loans on balance sheet and can work with borrowers on modifications before loans hit the non-accrual threshold.

What It Means for Multifamily Housing

For multifamily owners, the quarter's data is a reminder that the sector is no longer immune to the stresses affecting the broader commercial real estate market. Loans originated during the low-rate era that are approaching maturity, or that have already converted from interest-only to amortizing payments, are the most vulnerable.

For renters, rising delinquency does not automatically translate into disruption. Properties with distressed loans typically continue operating normally while lenders and special servicers negotiate modifications, extensions, or, in some cases, transitions in ownership. Federal and state affordable housing regulators also have tools to protect tenants in properties that fall into serious distress.

A Backdrop for Later 2025 Reports

The Q2 2025 report set the tone for the second half of the year. MBA's subsequent release on the third quarter of 2025 described delinquency rates as mixed rather than uniformly higher, suggesting that stress has become more concentrated rather than broadly worsening. Still, the second-quarter numbers remain an important marker of where the commercial and multifamily mortgage markets stood heading into the back half of the year and into ongoing conversations about refinancing, capital availability, and the outlook for both office and apartment properties.

Where to Find the Full Data

MBA publishes its Commercial/Multifamily Mortgage Delinquency Rates report each quarter, with detailed breakdowns by investor group and historical series going back decades. Homeowners, renters, and investors who want to track how the commercial real estate debt markets are evolving can access the ongoing series directly from MBA's research pages, which are updated with each quarterly release.