For all the month-to-month tracking of delinquencies and extend-and-pretend strategies to keep loans from going into default, Fitch Ratings has forecast a “deteriorating” asset performance outlook for many North American structured finance sectors in 2026.
“Overall CMBS asset performance will remain ‘deteriorating’ in 2026 as office delinquencies peak, consumer confidence and spending wane, demand softens and higher capex and operating expenses weigh on office, hotel, and retail segments,” wrote Will Rossiter, a director at Fitch Ratings.
Driving forces for performance deterioration include the ongoing labor market, cost-of-living pressures, trade policy and tariff uncertainty.
Fitch expects that percentages of CMBS loans that fall into 60-day-plus arrears changing from 2025 to 2026 by property subtype will be office (8.12% in 2025, 10% in 2026); hotel (3.29% in 2025, 3.6% in 2026); industrial (0.67% in 2025, 0.6% in 2026); multifamily (1.12% in 2025, 1.4% in 2026); single-family rental (0.98% in 2025, 0.9% in 2026) and retail (3.42% in 2025, 4.1% in 2026).
In CMBS, office, retail and hotel properties are expected to deteriorate. Multifamily, single-family rental, industrial and data centers are expected to be neutral.
Broadly syndicated collateralized loan obligations (CLO) performance will be neutral next year due to expected Federal Reserve rate cuts and favorable tax changes that might offset a softening economy. Middle-market and private credit CLOs will also benefit, although they will be more vulnerable to potential shocks given their smaller scale and lower diversification.
The strongest performance — stability — will be for prime residential mortgage-backed securities (RMBS) borrowers that are more capable of absorbing economic strains in 2026.
Asset-backed securities performance will likely be “uneven” in 2026, particularly for such sectors as auto loans, nonprime credit cards, some student loans and macroeconomic conditions negatively affect borrowers, according to Fitch.
Most structured finance rating outlooks are stable, given credit enhancement growth and structural protections. In November 2025, negative rating outlooks were 6.4% of North American Fitch-rated notes. CMBS ratings had the most risk, with 21% having a negative outlook. RMBS criteria updates were the source of the increase in stable outlooks.
“We expect CMBS asset performance across office, hotel and retail segments to deteriorate in 2026, as office delinquencies peak, consumer confidence and spending wanes, demand softens, and capex and operating expenses rise," Rossiter summed up in the report.
"Easing supply and recovering demand should support the stable industrial CMBS performance, with data centers performance also expected to be stable as financing needs grow."
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