Multifamily Loan Delinquencies on the Rise

By the numbers, multifamily lending has entered a new phase of stress — one that deserves serious attention from investors, lenders, and brokers navigating today’s commercial real estate market. 

According to CRED iQ data reported by community, commercial and savings banks, multifamily overall delinquency reached 1.37 percent as of the 2025 third quarter, representing the highest level since the post-Global Financial Crisis (GFC) recovery era and a dramatic escalation from the near-zero stress environment of 2021 and early 2022.

Delinquency trends: From benign to elevated in three years

To appreciate how quickly conditions have deteriorated, consider the baseline. From 2017 through mid-2022, multifamily overall delinquency rates held comfortably between 0.23 percent and 0.39 percent — a period defined by low interest rates, strong rent growth, and abundant capital. That era effectively ended in 2022 as the Federal Reserve began its most aggressive rate hiking cycle in decades.

By third quarter 2023, overall delinquency had climbed to 0.4 percent. One year later, third quarter 2024 showed 0.97 percent. And, by third quarter 2025, the rate hit 1.37 percent — a 3.4 times increase in just two years. In dollar terms, the total delinquent multifamily loan balance grew from approximately $2.4 billion in third quarter 2023 to nearly $8.9 billion in the same period in 2025, an increase of more than $6.5 billion in 24 months.

The composition of that delinquency is equally telling. Serious delinquencies — loans 90 days or more past due — now represent the overwhelming majority of stressed exposure at 1.09 percent, or roughly $7.1 billion. Early-stage delinquencies (30 to 89 days) stand at 0.28 percent, suggesting that the pipeline of new stress, while active, is not yet overwhelming. The concern is the accumulation at the severe end of the spectrum, where borrowers have exhausted short-term remedies and lenders face resolution decisions.

Losses are accelerating

Perhaps more consequential than delinquency rates is the trajectory of realized losses. For much of the period from 2017 through 2021, bank-reported multifamily loss rates were effectively zero or nominal. By third quarter 2024, losses had risen to 0.08 percent, or roughly $504 million. As of third quarter 2025, the loss rate stood at 0.14 percent — translating to approximately $911 million in a single quarter.

To place that in historical context, cumulative quarterly losses during the GFC peaked around 1.24 percent in late 2010, with total delinquencies exceeding 5.7 percent at the cycle’s worst. More recent levels remain well below those extremes. However, the velocity of the current loss cycle is noteworthy: It took roughly four years for GFC-era losses to fully materialize. Today’s losses are compressing on a faster timeline, driven by higher floating-rate exposure, rapid cap rate expansion, and value declines concentrated in specific markets and vintages.

What the data signals for CRE stakeholders

For lenders, the data reinforces the need for proactive asset management. With $7.1 billion in 90-plus-day delinquencies sitting on bank balance sheets, resolution strategies — workouts, modifications, note sales — will define credit outcomes over the next 12 to 24 months. For investors, the rise in distressed inventory creates opportunity, but underwriting discipline remains essential. Assets with overleveraged 2021-2022 vintage debt remain the highest-risk segment.

For brokers, understanding where distress is concentrated — by geography, loan vintage and lender type — will be critical to sourcing off-market deal flow as banks seek resolution.

The multifamily sector’s fundamental demand drivers remain intact. But the credit cycle has clearly turned. CRED iQ data through third quarter 2025 makes one thing clear: Stress is no longer emerging — it has arrived.

Mike Haas is the founder and CEO of CRED iQ.