It’s not exactly news that 2025 will be a time of reckoning for many holders of commercial loans that mature this year. But the scale of the loans coming due may well be surprising: $957 billion.
That is an increase of 3% from the $929 billion that matured in 2024. It is also 20% of the $4.8 trillion of outstanding commercial mortgages now held by lenders and investors, according to the Mortgage Bankers Association (MBA).
The increase may be the result of a rise in long-term interest rates that took many borrowers by surprise and washed out some of the benefits expected when the Fed cut short-term rates by 100 basis points last year. “As a result, many loans that might have matured in 2024 have been extended into 2025, with the aggregate results showing a 3% increase in total commercial mortgages maturing in 2025 compared to what MBA had estimated would mature last year,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
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Of the loans coming due this year, 22% are for industrial, 24% for office, 35% for hotel/motel, 14% for multifamily, and 18% for retail and healthcare properties.
The loans maturing include $452 billion (25%) of mortgages serviced by depository institutions, $231 billion (29%) in CMBS, collateralized loan obligations or other asset-backed securities, and $180 billion (35%) of mortgages held by credit companies involved in warehouse, or by other lenders.
Other institutions are in a slightly better position. Just 3% ($31 billion) of mortgages guaranteed or held by Fannie Mae, Freddie Mac, the Federal Housing Administration and Ginnie Mae mature in 2025. Life insurance companies have $64 billion (9%) exposure to outstanding mortgage balances this year.
Still, the MBA sees a brighter year ahead, though challenges remain. It projects that lending will rise to $583 billion in 2025, 16% more than the $503 billion generated in 2024. Multifamily lending will be a big part of it, rising to $361 billion, up 16% from $312 billion last year.
In 2026, MBA anticipates that CRE originations in total will climb to $709 billion, including $419 billion for multifamily lending.
“There are still plenty of challenges in CRE, but there are also signs of stabilization,” Fratantoni commented. “It appears that at least some borrowers and lenders are ready to move. With abundant capital ready to be deployed, and if rates decline as they did at the end of 2024, we fully expect that borrowers and lenders will jump on any opportunities.” He noted, however, that several factors could cause volatility in rates.
In the years to come, MBA forecasts slower economic growth and a weaker job market. “In the next two years, we expect an increase in originations across property types and capital sources, but certainly recognize the additional challenges posed by the large number of loans scheduled to mature in 2025,” Fratantoni said.
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