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Among lending categories, construction and development led the U.S. economy in loan growth for the second consecutive year in 2016.
U.S. C&D bank lending increased 14% last year, beating out 2015’s 13% growth and far outpacing the total loan growth of 5%. Many regulators are expressing concern over the increase in lending to a higher risk sector, CoStar reports. Regulators increased scrutiny of C&D commercial real estate exposure last year by reviewing underwriting, monitoring practices and unveiling more strenuous stress tests.
On the plus side, Kroll Bond Rating Agency said bank C&D loan exposure remains below pre-crisis levels, and total C&D bank loans accounted for a mere 3.4% of all 2016 loans, compared to 2007's high of 8.4%.
