The Fed Hikes, Credit Tightens and Commercial Real Estate Looks Like the Next Problem for Banks
The Breakdown
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The Next Banking Crisis Could Be Commercial Property
This year we'll see a record amount of commercial mortgages expire and need to be refinanced at much higher interest rates if Fed policy remains static. Commercial property prices have already been under pressure with work from home driving down demand for office space. At the median US bank, commercial real estate makes up 38% of all loan holdings. A major default wave could cause a ripple effect as other commercial loans are marked down to recognize looming credit risk.
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