Commercial mortgage performance improved in the second quarter of 2026, with overall delinquency rates for loans backed by income-producing real estate assets moving lower. The findings come from the Mortgage Bankers Association’s latest Commercial Real Estate Finance Loan Performance Survey, which tracks non-current balances across major lender categories and property sectors.
The MBA survey indicates that delinquency rates generally declined across most of the primary property types during the quarter. While performance was not uniform, the broad trend pointed to fewer loans classified as delinquent, signaling some stabilization in the commercial mortgage landscape following recent market volatility.
Office and lodging properties remained the weakest segments in the dataset, continuing to post the highest delinquency levels among the core property types. The survey did not provide specific delinquency percentages for these sectors but emphasized that these two categories are still facing the greatest performance challenges, even as broader indicators show improvement.
Within the capital stack, commercial mortgage-backed securities (CMBS) continued to carry the highest share of delinquent loans among major lender groups. CMBS delinquency rates fell by 39 basis points during the second quarter, ending the period at 4.82%. This represented a meaningful quarter-over-quarter improvement but still left CMBS performance lagging that of other lending channels covered by the report.
Life insurance company portfolios recorded the second-highest delinquency rate among the major lender categories tracked by MBA. Even so, life company loan performance also strengthened in the quarter, with delinquencies declining by 28 basis points to 1.19%. The figures indicate that, while credit stress persists, non-bank balance-sheet lenders are seeing comparatively lower levels of trouble than the CMBS market.
Reggie Booker, associate vice president of commercial real estate research at the MBA, noted that delinquency rates declined across most major property types and capital sources during the quarter. He acknowledged the ongoing headwinds facing office and lodging assets and the comparatively elevated delinquency rate in CMBS but pointed to the overall decline in non-current loan balances as evidence of continued stability in the commercial mortgage market.
For stakeholders across commercial real estate finance, the survey results suggest that while risk remains concentrated in specific sectors and securitized pools, the broader credit environment for commercial mortgages has not deteriorated further in recent months. Instead, the second quarter showed incremental improvement in loan performance metrics, particularly for balance-sheet lenders such as life insurance companies.
