US banks and other lenders are tightening their standards for new loans and scrutinizing existing ones, as well as increasing their reserves in preparation for potential losses in the commercial real estate sector, Reuters reported.

The US commercial property market has faced severe challenges since the pandemic due to lingering office vacancies, diminished retail activity and higher interest rates.

While regional banks are most exposed to the commercial real estate sector, second quarter earnings show that a number of big banks have prepared for potential defaults, primarily on office loans.

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