The commercial real estate (CRE) market has been balancing on the threshold of a major readjustment since 2021. That’s when the first of the extremely low interest rate, three-year loans were becoming due.
How Long Can Banks Hold Underwater Loans?
So far, the banks’ main solution to that problem has been to kick the can down the road a bit by extending maturing loans at the same low interest rates for another three years and hoping interest rates fall.
But how long can financial institutions afford to earn less-than market rates on their portfolios?
It’s not just one or two classes of commercial real estate that are in danger of becoming non-performing assets if they are forced to refinance at the current high interest rates, which are 50 percent—or more—higher they were in 2021, depending on the class of property. Endangered commercial real estate properties include office buildings, multi-family properties, retail centers, and hotels, among others.
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How Will Banks Survive the Commercial Real Estate Meltdown?
- by: James Gorrie
- 2024-05-21
- Source:
The Epoch Times
- 05/21/2024
Skyline London @sunset in contrast with gray sky. View from Commercial Street. by Frans Ruiter is licensed under unsplash.com
Skyline London @sunset in contrast with gray sky. View from Commercial Street. by Frans Ruiter is licensed under unsplash.com
