via geofinancialnews:
Declining credit quality metrics in Commercial real estate lending pushed several banks to reduce their exposures to the sector by offloading loans related to the asset class, particularly office loans, in the second quarter.
US banks’ commercial real estate loan portfolios showed signs of increasing stress
During the second quarter, the net charge-off rate for commercial real estate loans experienced a modest but significant 18 basis-point uptick, landing at 0.26%. This shift marked a notable 26 basis-point rise compared to the same period in the previous year, signifying the highest charge-off rate observed since the fourth quarter of 2020.
The surge in commercial real estate loan delinquencies mirrored the struggles faced by borrowers in servicing their increasingly costly debt obligations.