Bank CRE Lending Jumped 80% in Q1 2026: How Lenders Hedge the Credit Risk

Banks originated commercial real estate loans at an 80% higher clip in the first quarter of 2026 than a year earlier, ending a two-year retreat from the sector.

Why it matters: Lenders growing CRE books should line up nonpayment coverage now, while carrier terms are competitive and defaults are still contained.

Why bank CRE lending rebounded

Two years of “pencils down” ended as loss fears eased and a wall of maturing loans forced borrowers back to the table.

• Depository lending rose 80% year over year in the first quarter of 2026, the sharpest jump of any capital source, as total commercial and multifamily originations climbed 52%.
• JPMorgan Chase, Bank of America, and Goldman Sachs cut their loan-loss provisions in the first half of 2026, a sign they believe the worst of the CRE stress has passed.
• Competition among lenders has pushed rates, leverage, and terms back in borrowers’ favor, according to reporting on the sector’s return.

Where the credit risk still sits

The rebound is running ahead of the fundamentals. Delinquencies keep climbing in the property types banks hold most, part of a wider run of credit losses across private lending.

• Commercial mortgage delinquencies rose to 4.02% in the first quarter of 2026 from 3.86% a quarter earlier, with office and multifamily leading the increase.
• Bank and thrift CRE delinquencies sat at 1.24% for loans 90 or more days past due or in non-accrual, low but rising and concentrated in the office loans banks carry directly.
• Bank OZK and other institutions trimmed CRE exposure even as peers expanded, which shows the recovery is uneven.

How nonpayment insurance protects a CRE loan book

Nonpayment insurance lets a bank keep originating while shifting the default risk to a highly rated insurer, a tool that matters more as regulators sharpen their focus on bank resilience.

• The policy indemnifies the lender for the covered loss when a borrower defaults, limiting the impairment that hits capital, subject to credit limits, notification requirements, and policy terms in place at the time of the default.
• Under Basel standards, and where the supervisor recognizes the coverage as credit risk mitigation, an insured exposure can carry the insurer’s risk weight, which can be as low as 20%, rather than the borrower’s.
• Industry analysis shows a nonpayment policy can cut the regulatory capital a bank holds against an exposure by as much as 60% in illustrative cases, depending on the structure and regulatory treatment.

What to do now

Lenders scaling CRE should build default protection into the loan before the next downturn, not during it.

1. Map your CRE concentration by property type and flag the office and multifamily exposures driving delinquency.
2. Price nonpayment insurance now, while competition among carriers keeps terms and rates favorable.
3. Confirm with your capital team how coverage would change the risk-weighted asset treatment on insured loans.
4. Contact Securitas Global Risk Solutions to structure lender nonpayment coverage for your CRE book.

Disclaimer:
This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies. It is not meant to supersede any policy requirements. Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation.

Since 2004, Securitas Global Risk Solutions, LLC has helped clients develop trade credit and political risk transfer solutions. As an independent brokerage, Securitas is focused on developing comprehensive solutions that meet client needs, ensuring a complete understanding of policy wording and delivering excellent responsive service. If you want to understand how nonpayment insurance can protect your lending portfolio, contact Securitas Global Risk Solutions to speak with a specialist.