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Banks May Not Be Able To Fund Commercial Real Estate For Much Longer

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In the aftermath of the financial crisis banks substituted home loans with commercial mortgages, but now analysts are afraid banks won’t be able to fund the $400B of commercial real estate loans that need refinancing next year.

Those fears largely come from the decline in CMBS sales, which have fallen to their lowest levels in more than a decade, Bloomberg reports. On top of that Morgan Stanley analysts worry that added regulatory scrutiny of commercial real estate lending by smaller banks could spur looser underwriting standards and lower fees.

Analysts also say increased regulatory pressure could push down commercial property prices, especially impacting the multifamily sector along with lower-quality malls in secondary markets. [Bloomberg]