The Federal Reserve said that as the overdue rate of office-related loans continues to rise, banks are preparing for further losses.
The Federal Reserve said on Friday that the overdue rate of some commercial real estate loans had soared above pre-pandemic levels. The Federal Reserve stated in its semi-annual report that the focus of Federal Reserve officials is “improving the speed, strength, and flexibility of supervision as appropriate.”
US banking regulators such as the Federal Reserve have been warning the commercial real estate market. About a year ago, officials asked banks to work with borrowers who have good credit but are under pressure in this area. As borrowing costs soar, landlords are under pressure.
A problem with New York Community Bank earlier this year highlighted the potential risks. At the time, the bank's portfolio was worrying, which included multi-billion dollar condominium loans to New York rent-controlled complexes.