Commercial Real Estate Charge-Off Rate: 0.13% in Q4 2025
CRE Charge-Off Rate fell to 0.13% in Q4 2025, down 0.05pp from Q3 2025. Year-over-year, down 0.11pp from 0.24%.
CRE Charge-Off Rate -- Historical Chart
CRE Loan Charge-Off Rate. Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve Bank of St. Louis (FRED), Series CORCREXFACBS. Updated 2026-03-09.
What the Q4 2025 Data Shows
At 0.13%, cre charge-off rate in Q4 2025 is above the 10-year average of 0.08% by 0.05pp. The trend is downward, with decreases in 3 of the last 4 quarters.
The CRE charge-off rate (FRED series CORCREXFACBS) measures actual realized losses on commercial real estate loans at U.S. banks. When a CRE borrower defaults and the bank forecloses, the difference between the outstanding loan balance and the recovery value (after selling the property) becomes the charge-off.
CRE charge-offs tend to lag delinquencies significantly because the foreclosure and disposition process for commercial properties takes 12-24 months in most jurisdictions. A CRE loan that went delinquent in 2024 may not produce a charge-off until 2025 or 2026.
This metric is particularly important in the current environment because of the office sector crisis. Many office properties are appraising at 30-50% below their pre-pandemic values, which means that when banks finally foreclose and sell, the charge-offs could be severe.
What This Metric Measures
This page tracks the annualized percentage of commercial real estate loans (excluding farmland) at all commercial banks that have been written off as uncollectible. The data comes from the Federal Reserve Bank of St. Louis FRED database, series CORCREXFACBS, updated quarterly.
Historical Context
The all-time peak was 2.80% in Q4 2009 — roughly 21.5x the current level. The all-time trough was -0.04% in Q4 2006. During COVID-19, the reading hit 0.10% (Q4 2020). Year-over-year, the metric has moved -45.8%.
Why It Matters
CRE charge-offs hit bank earnings directly and can threaten capital adequacy at institutions with concentrated CRE portfolios. Regional and community banks -- which hold the bulk of U.S. CRE loans -- are most exposed. A significant increase in CRE charge-offs can trigger downgrades, dividend restrictions, and forced capital raises.
For commercial real estate investors and developers, rising charge-offs mean banks are taking real losses on properties similar to theirs. This reduces bank appetite for new CRE lending and can depress property values further as foreclosed properties come to market at distressed prices.
What This Means for Business Owners
Understanding where this metric stands relative to historical norms helps business owners make better borrowing decisions. When cre charge-off rate is above its 10-year average, it signals changing conditions in the credit markets that affect both cost and availability of financing.
Comparison: Related Series
| Series | Current | Period | YoY Change |
|---|---|---|---|
| CRE Loan Charge-Off Rate | 0.13% | Q4 2025 | -0.11pp |
| CRE Loan Delinquency Rate | 1.58% | Q4 2025 | +0.02pp |
CRE Charge-Off Rate -- Frequently Asked Questions
The CRE charge-off rate is 0.13% as of Q4 2025, per FRED series CORCREXFACBS. This represents actual losses on commercial real estate loans at all FDIC-insured commercial banks.
CRE foreclosure and property disposition takes 12-24 months. Banks work with borrowers on modifications, then foreclose, then manage and sell the property. The charge-off is not recorded until the loss is realized through sale or writedown.
The peak was 2.80% in Q4 2009 during the Great Recession when CRE values collapsed across nearly every property type and market. Recovery rates on foreclosed CRE dropped to 40-50 cents on the dollar in the worst cases.
CRE charge-offs tend to be more volatile. In normal times, recovery rates on CRE loans are high because the property serves as collateral. But during property market crashes, recovery rates plummet and charge-offs spike far above C&I levels.
The rate moved down by 0.05pp from Q3 2025 to Q4 2025. The trend is downward, with decreases in 3 of the last 4 quarters. Given the lag between delinquency and charge-off, rising CRE delinquencies today point to higher charge-offs ahead.
FRED series CORCREXFACBS, from the Federal Reserve Board of Governors quarterly Charge-Off and Delinquency Rates release. Excludes farmland loans.