Commercial real estate lending at FDIC-insured institutions is facing mounting challenges, with delinquencies and losses climbing to levels not seen in over a decade, according to a new analysis by CRED iQ. The report, which examines first-quarter 2025 performance against long-term trends dating back to March 2007, reveals a market grappling with both rising risk and signs of stabilization, depending on the property segment.
CRED iQ’s analysis focused on two key sectors: multifamily properties and core commercial real estate. By concentrating on FDIC-insured commercial banks and savings institutions, the software firm stated that it was able to identify patterns in CRE loan performance that provide insight into the current market environment.
One of the most striking findings is the slowdown in core CRE lending growth. While the long-term annual growth rate has averaged 4.55%, the annualized rate for the first quarter of 2025 fell to just 1.22%—the lowest since 2012. CRED iQ described this as evidence of a “cautious lending environment.”
At the same time, delinquencies in core CRE loans are on the rise. In total, they reached $31.4 billion in the first quarter, representing a 1.70% overall delinquency rate. Of this amount, $25.1 billion—about 80%—are loans at least 90 days past due. Another $6.3 billion, or 20%, are between 30 and 89 days delinquent, according to CRED iQ.
Despite these challenges, there is a glimmer of optimism for core CRE. Net losses in this segment declined to $3.9 billion in the first quarter, down from $5.9 billion in the previous quarter. CRED iQ suggested this drop “indicates some stabilization” and may signal that core CRE loans have reached a turning point.
The multifamily sector, however, is facing intensifying headwinds. Losses in this segment climbed to $767 million in the first quarter—the highest quarterly total since 2012. CRED iQ noted that this continued increase “highlights growing challenges” for multifamily properties. The report also pointed out that the ongoing rise in losses leaves uncertainty about whether the trend will continue.
In a separate analysis of delinquency trends from March 2020 to March 2025, CRED iQ found a dramatic surge in multifamily delinquencies. The total grew from $1.5 billion, or a 0.3% delinquency rate, in 2020 to $9.4 billion and a 1.5% rate in 2025. Loans at least 90 days past due “increased dramatically,” jumping from $0.56 billion in 2020 to $6.71 billion in 2025, according to the firm.
Core CRE delinquencies also nearly doubled over the same period, though the growth was less dramatic than in multifamily. Delinquent balances rose from $15.4 billion (1%) in 2020 to $31.4 billion (1.7%) in 2025, with the 90-day-plus portion swelling from $9.7 billion to $25.1 billion.
“These shifts underscore the increasing pressures on CRE loan performance, particularly in the multifamily sector, where rising delinquencies and losses signal heightened risk,” CRED iQ wrote.
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