- Bank CRE originations reached $9.2 billion in Q2 2026, up 29% from Q1 and the highest quarterly total since Q3 2022, while the noncurrent rate fell to 1.42%.
- Criticized office balances dropped to 22.3% from 25.3%, but Los Angeles sits at 35.6%, and Sunbelt multifamily stress is concentrated in Phoenix, Houston, Dallas and Atlanta.
- The data predates the Fed’s rate increase and a sharp climb in the 10-year Treasury yield, and bank earnings calls point to refinancing at higher rates as the main forward risk.
The noncurrent rate on bank commercial real estate loans fell to 1.42% in the second quarter of 2026, its lowest since Q3 2023, according to Trepp Research.
Lending picked up too: banks originated $9.2 billion in the quarter, a 29% jump from Q1 and the best showing since Q3 2022.
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Delinquencies Ease
The noncurrent rate slipped from 1.52% in Q1, and the delinquency rate improved 18 basis points, to 1.68%.
Trepp built the analysis mainly on its anonymized loan-level data set, which covers about $196 billion of bank balance-sheet loans from multiple banks, plus Call Report data.
Office Losses Still Working Through
The criticized share of office balances in the data set fell to 22.3% from 25.3% in Q1. That is progress, but Trepp says office losses arrive late in the resolution cycle.
Among the metros Trepp reported, Los Angeles carries the highest office criticized rate at 35.6%.
Sunbelt Apartments Stand Out
Apartment stress clusters in a handful of Sunbelt metros. Phoenix leads at 38.6%, and Houston, Dallas and Atlanta land at 35.5%, 35.3% and 34.8%, all far above the 22.5% national figure.
That lines up with the Trepp data we covered in October on floating-rate apartment loans in Texas, where roughly one in four performing loans reported a DSCR below 1.0x.
Why It Matters
The Q2 numbers are as of June 30. The picture has shifted since June 30: per Trepp, the Fed has lifted rates and Treasury’s 10-year yield has surged.
Our August look at community bank earnings found banks with similar multifamily concentrations posting sharply different results, so strategy and geography matter as much as exposure.
What’s Next
Trepp also read through third-quarter earnings calls at 33 banks, and the common worry was borrowers facing refinancing at higher rates. Q3 loan-level data will show whether the improvement holds.
