Reasoning
With the federal funds target range holding steady at 3.50 to 3.75 percent and projections suggesting an increase to 3.8 percent by year-end, borrowing costs remain high, which may strain commercial real estate borrowers. Historical trends indicate that increased interest rates typically correlate with rising delinquencies; thus, current economic conditions suggest a heightened risk of commercial real estate loan delinquencies reaching a new high in H2 2026.Key uncertainty
The potential for a sudden economic downturn or financial crisis could increase delinquencies more than currently anticipated.