Commercial mortgage-backed securities (CMBS) delinquency rates climbed to 7.03% in April — the highest reading since early 2021.

By the numbers: Trepp reports a 38-basis-point increase from March and a nearly 200-basis-point jump year-over-year, bringing the total balance of delinquent loans to $41.9 billion. While 91.62% of loans remain current, early-stage delinquencies and non-performing balloon loans, now at 2.50%, are on the rise.

Looking deeper: Factoring in loans that have reached maturity but continue to make payments pushes the delinquency figure to 8.37%, flat month-over-month but signaling deeper underlying stress.

Sector breakdown: Multifamily experienced the sharpest increase, with delinquencies jumping 113 basis points to 6.57% — a dramatic rise from just 1.33% a year ago. Lodging followed closely, increasing by 66 basis points to 7.85%. Both sectors, once viewed as defensive, are now showing signs of significant strain.

Office remains the most challenged: Office delinquencies climbed again to 10.28% in April, up 52 basis points after modest improvement earlier in the year — highlighting persistent headwinds for the sector.

A few positive notes: Retail delinquencies improved, falling 70 basis points to 7.12%. Industrial continues to lead in stability, with its delinquency rate dipping slightly to 0.50%.

The takeaway: The breach of the 7% delinquency threshold is a clear signal that distress is broadening. With multifamily and lodging now under increasing pressure, the narrative in the CMBS market is no longer limited to office troubles. Investors would be wise to reassess risk exposure across all property types as the market heads deeper into 2025.