As Trepp recently estimated, new CRE loan originations in Q3 were $2.5 billion, down from $4.7 billion in Q2. Multifamily (from $2.2 billion to $1.1 billion between quarters) and lodging ($0.2 billion down to $0.1 billion) saw the biggest quarter-over-quarter decreases.

But that was only part of the story. The report also covered a "surge in both short-term and serious delinquencies" as well as defaults. "CRE mortgage delinquencies experienced another uptick, continuing the upward trend that started in Q4 2022. However, in Q3 2023, the slope of the increase steepened, with the total delinquency rising to 1.5% in Q3 2023 from 1.2% in Q2. The serious delinquency rate, or the non-current loan rate, experienced an increase to 1.3% in Q3 from 1.0% in Q2."

Concerns about delinquencies and defaults in commercial real estate come from at least three directions. One is from regulators concerned about bank stability. There are $6 trillion in loans as of 2023 Q2, with half sitting on the balance sheets of banks, because these don't get sold off to government agencies the way residential mortgages do. CRE loans are also the largest loan category for almost a half of all U.S. banks.