The Strategist

Bloomberg: Many banks in the US will collapse due to huge commercial real estate debts

06/12/2023 - 05:11

According to Bloomberg, which cited industry analysts, regional banks may experience problems following the collapse of some major investment banks with comparable financial issues in the United States.

Alex Proimos
Alex Proimos
Experts say that regional banks in the U.S. may soon face financial difficulties as a result of their massive loan debt for commercial real estate, which has grown to a total of 1.5 trillion dollars.

The nation's office and retail real estate prices could decrease by 40% as a result of the approximately $1.5 trillion in US commercial real estate that must be returned by the end of 2025. This raises the possibility of local businesses engaged in this industry experiencing defaults, Bloomberg writes

The fundamental issue with loan repayments is that many homes have lost value on the US domestic market as a result of increased interest rates.