MBA's Economic Forecast Points to Steadier Ground for 2026
Commercial real estate financing is holding its footing despite a sluggish economy and cautious investors, with interest rates expected to remain largely stable and lending activity poised to improve through 2026. That's according to Mike Fratantoni, Chief Economist and Senior Vice President of Research and Business Development at the Mortgage Bankers Association, who spoke during the MBA Economic and CREF Market Outlook in San Diego.
Fratantoni said the Federal Reserve is unlikely to move aggressively on rates in the near term. "We don't see rates moving very much," he told attendees, suggesting the Fed might deliver "maybe one more cut" before pausing.
Even under tight monetary conditions, commercial mortgage originations have shown surprising resilience. Fratantoni noted that lending volumes "have held up better than expected" and are projected to accelerate into next year. "Commercial mortgage originations are strong, and we expect them to get stronger in 2026," he said.
A recurring concern in the market—the so-called maturity wall—has eased somewhat compared to 2025 but hasn't gone away entirely. "The maturity wall is shorter than it was last year, but it is still there," Fratantoni observed. Delinquency rates remain low by historic norms, he added, though they have begun to edge higher.
On the property side, rent inflation has cooled substantially and is now flat compared to a year ago. Home prices, meanwhile, are softening in several markets due to excess supply. "For much of the country, we have too many homes, and it is clearly a buyer's market," Fratantoni said. Still, affordability remains a key obstacle for many households, even with moderating rents and stagnant prices.
Looking ahead, Fratantoni said recently enacted tax legislation could lift near-term economic momentum by increasing consumer spending and supporting growth through the rest of the year.
Check back for additional coverage of Fratantoni's forecast and more insights from the MBA CREF Market Outlook.
Source: GlobeSt/ALM