Default Rates in Private Real Estate Loans (2025)
Private real estate lending can deliver strong returns, but understanding default risk is key to long-term success. Below, we break down the latest data on default rates in private real estate loans — segmented by loan type, property class, and geography — along with expert insight and visual breakdowns.
📊 Key Default Rate Statistics
Average Default Rate for Private Real Estate Loans in 2024: 5.7%
Private Credit (Overall): 5.7%
Commercial Mortgage Loans: 3.98%
Single-Family Residential Loans: 1.77%
Government-Sponsored Enterprise Loans (GSEs): 0.72%
Sources: Fitch Ratings, Mortgage Bankers Association (MBA), Federal Reserve, Milliman
🏢 Default Rates by Property Type
| Property Type | Default Rate (2024) |
|---|---|
| Office Buildings | 8.7% |
| Commercial Properties | 3.98% |
| Single-Family Residences | 1.77% |
| Government-Backed Mortgages | 0.72% |
Office space remains the most vulnerable sector due to long-term occupancy declines.
📍 Default Rates by U.S. Region
| Region | Average Default Rate |
| Midwest | 2.3% |
| South | 2.9% |
| West | 1.8% |
| Northeast | 2.2% |
Local economic resilience and demand trends significantly impact regional default risk.
📈 Trend: Default Rate Over Time (2020–2024)
| Year | Private Loan Default Rate |
| 2020 | 4.1% |
| 2021 | 3.5% |
| 2022 | 3.9% |
| 2023 | 4.6% |
| 2024 | 5.7% |
A rise in interest rates and economic tightening led to a spike in defaults in late 2023 and early 2024.
🔁 Default Rates by Loan Type
| Loan Type | Avg Default Rate (2024) |
| Traditional Bank Loans | 1.5% |
| Private Individual Loans | 4.6% |
| Bridge Loans | 6.1% |
| Hard Money Loans | 5.3% |
Loans with shorter terms and higher rates typically show greater volatility and risk.
🧠 Expert Insight
“The challenges facing different sectors vary — with office properties perhaps facing the most challenging combination of weaker fundamentals and stubbornly high interest rates.”
— Mike Fratantoni, Chief Economist, Mortgage Bankers Association
📚 Sources & Further Reading
Understanding default rates in private real estate loans helps investors align return expectations with actual risk exposure. Stay ahead of trends to protect your capital and make smarter lending decisions.
