Banks are cautiously putting money back to work in commercial real estate, even as the hangover from the low-rate boom continues to weigh on balance sheets.

A gradual reopening:

After a prolonged slowdown, banks are stepping back into the CRE market. Newmark estimates that lenders originated roughly $227B in new loans over the first three quarters of 2025—an 85% jump from last year and essentially a return to pre-pandemic volume. Multifamily drove about half of second-quarter production, and even the office sector is seeing selective lender interest as prices find a floor.

Old debt casts a long shadow:

Despite fresh activity, legacy problems remain unresolved. Overall CRE delinquencies are running at about 1.56%—a high not seen since 2014—and the rate is even higher among the biggest banks. Nonperforming balances continue to creep up, a sign that lender conservatism—not asset strength—is keeping the system stable.

“Extend and pretend” still rules:

Many lenders are continuing to modify and stretch out maturing loans instead of forcing resolution. Nearly $957B in CRE debt is now scheduled to come due in 2025, with banks holding almost half of it. Another $663B matures in 2026, and banks again represent the largest share of that exposure. What once looked like a single maturity cliff has spread into a rolling wave that could last into the next decade.

Macro risks are gathering:

The broader economy isn’t offering much relief. Forecasters see rising stagflation pressures and fewer paths to a soft landing, with recession probabilities ranging widely—from the mid-30s to more than 90%, depending on the model. Any unexpected downturn or rate shock could accelerate distress and force lenders to take losses.

A slow-motion workout:

For now, banks seem content to resolve problem loans gradually, avoiding major write-downs or forced sales. But analysts caution that this slow-drip approach could turn into a sprint if a significant stress event hits the market.

➥ The Bottom Line

Lenders have reopened the spigot, but they’re still carrying a heavy load of legacy risk. Unless the economy delivers a major jolt, expect a long, drawn-out cleanup—more steady leakage than sudden flood.