Commercial real estate lenders have spent the past two years bracing for a wave of distress tied to maturing loans and sharply higher interest rates. So far, that wave hasn't arrived in the way many expected.
Instead, the more interesting story is how the market is adjusting in real time—largely through loan modifications, extensions and a refinancing process that looks messier, but more manageable, than feared.
A Maturity Wall That Hasn't Hit All At Once
The industry's focus has long been on the so-called maturity wall, with concerns that borrowers facing higher borrowing costs would struggle to refinance, tipping loans into default.
"The idea behind the maturity wall is we had that huge run-up in interest rates," Thomas Mason, principal quantitative Research analyst at S&P Global Market Intelligence, tells GlobeSt.com. "In commercial real estate, you get hit with a balloon payment, and you usually get a new loan for it."
That long-standing assumption ran into trouble when rates jumped roughly 200 basis points from pandemic-era lows. The big question became straightforward, if unsettling, as Mason laid out: "How many of those borrowers can't refinance, and will those loans go into default?"
So far, the answer appears to be fewer than expected. "The data definitely shows [loan] modifications," Mason says.
S&P Global's own estimates underscore that shift. In April 2025, the firm projected a sizable volume of loans would come due within the year. By September, that figure had dropped by 16%.
"I would assume they extended the maturity length of the loans," he says. "It seems like the market was able to absorb a lot of what did mature that year, too."
Delinquencies Level Off With Some Perspective
Against that backdrop, delinquency numbers are no longer moving in the wrong direction, even if they remain elevated compared to pre-pandemic norms.
CRE loan delinquencies across U.S. banks held essentially flat at 1.53% in the first quarter of 2026, according to S&P Global Market Intelligence. On a year-over-year basis, they declined by 5 basis points—the first annual improvement since 2022.
That stability matters, but so does context. Before 2020, delinquency rates typically hovered around 0.6%, Mason says.
"In 2023 and 2024, we saw a steep increase to 1.6%," he says. "It created a lot of cause for concern. But the delinquency ratio has stabilized since then."
Viewed over a longer timeline, today's environment looks far less severe. In the first quarter of 2010, CRE loan delinquencies peaked at 11%, making current conditions "relatively manageable," Mason says.
Meanwhile, lending activity is picking up. Year-over-year CRE loan growth reached 3% in the first quarter, up from 2.8% at the end of 2025. The four largest U.S. bank lenders each posted growth of at least 5.5%, "demonstrating robust sector momentum," S&P Global Market Intelligence reported.
Risk Is Concentrated, Not Universal
If there is a clear takeaway from the data, it is that risk is no longer evenly distributed across the market.
"It seems like office is the area of concern, for good reason," Mason says. "It really is a structural change. If you have 300% of your capital in office, that's a red flag."
Geography also plays a role. Regulators are paying closer attention to how concentrated bank portfolios are, both by market and by asset type. A portfolio heavily exposed to rent-controlled multifamily in New York carries different risks than one spread across faster-growing Sun Belt markets.
Loan structure adds another layer. "You have a bunch of three-year loans, a bunch of five-year loans, a bunch of ten-year loans," Mason says. The clustering of five-year maturities, in particular, is shaping today's refinancing cycle, aside from longer-term multifamily loans, which tend to behave differently.
At the same time, who holds CRE debt is shifting. Banks with less than $100 billion in assets now account for 74% of the market, up from 61% in 2019. Within that group, mid-sized banks—those with $10 billion to $100 billion in assets—have significantly increased their share, while smaller banks have pulled back.
Even with those shifts, sentiment among lenders has improved, at least modestly.
"In terms of the biggest banks that make CRE loans, the mood seems cautiously optimistic now," Mason says.
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