Office of the Comptroller of the Currency

US Regulator is Already Worrying About the Next Property Bubble

A US regulator warned that banks risk inflating a commercial real estate (CRE) bubble.

Thomas Curry, US comptroller of the currency, said banks were easing checks on borrowers and boosting loans to investors in the sector.

This creates more debt of a poor quality, at a time when valuations of the underlying property assets are already stretched.

“It’s at this stage of the cycle that we also see strong loan growth combined with easing underwriting to result in increased credit risk,” Curry said in a speech on Monday.

“At the end of 2015, 406 banks had CRE portfolios that had grown more than 50 percent in the prior three years. Of note, more than 180 of these banks more than doubled their CRE portfolios during the past three years.”

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