Fluctuations in Commercial and Multifamily Mortgage Performance

For two consecutive quarters, the Mortgage Bankers Association (MBA) has highlighted fluctuations in commercial and multifamily mortgage performance among key investor groups, driven by ongoing challenges in specific property sectors. Despite these hurdles, Reggie Booker, the associate vice president of commercial real estate research at the MBA, affirmed that "overall loan performance remains resilient," according to a recent statement related to the organization's fourth-quarter commercial delinquency report.

Currently, five primary capital sources account for over 80% of commercial mortgage debt: commercial banks and thrifts, the commercial mortgage-backed securities (CMBS) market, life insurance companies, and government-sponsored enterprises such as Fannie Mae and Freddie Mac. The report underscores the difficulty in comparing delinquencies across these sources, as each employs different measurement criteria. For instance, Fannie Mae considers loans with payment forbearance as delinquent unless the borrower complies with the terms, unlike Freddie Mac.

In the final quarter of 2025, CMBS delinquency rates remained steady at approximately 6.58%, significantly higher than the 5.78% rate from 2024. Fannie Mae's delinquency rate saw a slight rise of 0.06% from the previous quarter, finalizing at 0.74%, while Freddie Mac experienced a minor decrease, ending at 0.44%. Booker noted that "delinquencies for Fannie Mae loans increased for the second straight quarter and are now above the midpoint of their historical range going back to 1996."

Commercial mortgage delinquency rates for banks and thrifts exhibited minimal change, decreasing by 0.04% to 1.23%. This represents a small improvement yet remains significantly above the 0.45% rate at the end of 2022. Conversely, life insurance company portfolios saw a decline in delinquencies by 0.15%, reaching 0.32%, down from 0.43% the previous year but still higher than the 0.11% rate in the fourth quarter of 2022. Looking into 2026, Booker remarked, "Investors will be closely watching how refinancing pressures and economic conditions shape credit performance across capital sources."