The all-real-estate delinquency rate at 1.66% is a blend of two markets moving in opposite directions. Residential mortgages at 1.78% are near historic lows, anchored by locked-in pandemic-era rates. Commercial real estate at 1.58% is grinding higher, driven by office vacancies and refinancing stress.
The composite rate lands in between, at a level that looks moderate. But "moderate" is the wrong word for a metric that averages strength and weakness. What you are actually looking at is a housing market where most homeowners are in excellent shape and a commercial property market where a growing number of landlords cannot cover their debt payments.
Real estate loans make up roughly 45% of total bank lending. That concentration is why regulators track this number closely. But the aggregate masks the real risk: CRE concentration at community banks. While the composite rate is below its 10-year average of 1.80%, the CRE component is 0.62pp above its own 10-year average.
Residential mortgages make up the larger share of total real estate lending at most banks. This means the low mortgage delinquency rate pulls the composite down even as CRE deteriorates. The composite rate could remain stable or even decline while CRE delinquencies double -- simply because mortgages are a bigger weight in the calculation.
This is exactly what happened in the early stages of the 2008 crisis. The composite real estate rate did not spike until mortgage delinquencies surged alongside CRE. As long as mortgages hold steady, the composite will understate CRE stress.
Banks respond differently to each component. For residential lending, the low delinquency rate has kept mortgage credit conditions relatively loose. Qualified buyers can still get mortgages at competitive spreads (the issue is affordability, not availability).
For CRE lending, the response is sharply different. Construction and development lending has tightened dramatically. Banks are reducing CRE concentrations where possible. New CRE loan originations require higher equity contributions, lower LTVs, and more conservative underwriting than at any point since 2012.
For business owners who need commercial space, this two-speed market creates an unusual dynamic: it is easy to finance a home but hard to finance a building. That asymmetry affects where businesses locate, how much they spend on facilities, and whether they buy or lease.
All real estate delinquency in the context of other loan types:
| Loan Category | Current | Prior Qtr | QoQ Change | Year Ago | YoY Change |
|---|---|---|---|---|---|
| Business Loans (C&I) | 1.34% | 1.33% | +0.01pp | 1.27% | +0.07pp |
| Commercial Real Estate | 1.58% | 1.56% | +0.02pp | 1.56% | +0.02pp |
| Consumer Loans | 2.62% | 2.71% | -0.09pp | 2.76% | -0.14pp |
| Credit Cards | 2.94% | 2.98% | -0.04pp | 3.08% | -0.14pp |
| All Loans (total) | 1.48% | 1.49% | -0.01pp | 1.53% | -0.05pp |
The all real estate loan delinquency rate is 1.66% as of Q4 2025, per FRED series DRSREACBS. This combines residential and commercial real estate loans.
Mortgage delinquency is 1.78% (near historic lows). CRE delinquency is 1.58% (rising). The composite blends these different stories.
Mortgages are a larger share of total real estate lending. Low mortgage delinquency pulls the composite down even while CRE deteriorates.
The peak was 10.20% in Q1 2010 during the financial crisis, when both residential and commercial loans were severely impaired.
Mixed. The composite moved down by 0.01pp last quarter. Mortgages are flat. CRE continues to edge higher. The net effect is roughly stable.
FRED series DRSREACBS from the Federal Reserve Board of Governors quarterly release.