Commercial property loans are among the biggest perceived risks for US banks, following the collapse of three US banks.
Investors have said the threat of a credit crunch is now a greater fear than inflation, with strains showing in the $5.6tn commercial real estate loan market. The Federal Reserve’s year-long series of interest rate rises has led to sharply higher borrowing costs and weakening property valuations.
“The collapse of SVB is putting a magnifying glass on regional banks, and their commercial real estate loan books remain an area of major concern,” said JPMorgan securitisation analyst Chong Sin.
The comments follow those made by the head of its asset management arm, George Gatch, who warned: “When the Federal Reserve hits the brakes, something goes through the windshield.”
