"Commercial Real Estate Upheaval: Impact on US Banks and Buyers"
The rapid rise in interest rates over the past two years has sparked trouble in the US commercial real estate market, particularly in office and multi-family properties. Lenders are already feeling the heat, with some recording losses and cutting dividends. The wave of mortgages coming due could turn a micro problem into a macro one, potentially leading to a financial crisis. Small US banks with significant non-residential real estate exposure are particularly at risk, and the potential failure of hundreds of smaller lenders could cause chaos in the financial system. Regulators may need to prepare for the worst and be clear about the possibility of bank failures, which could lead to mergers with larger and stronger rivals.