$90B Debt Wave Could Slow Property Boom

Maturing commercial mortgages, totaling $90 billion, are set to mature in 2017. Much of the pool represents leftover debt from the 2007 lending boom, and, according to analysts, it could prove problematic for the U.S. real estate market.

Specifically, it is becoming more difficult for property owners relying on borrowed cash to obtain new loans to pay off the old ones. By the same token, lenders are becoming more selective about what properties they’ll fund. Rising interest rates and regulatory issues for banks are also putting a crimp into refinancing. The end result could be higher property delinquencies.

“There are a lot more problem loans out there than people think,” said Ray Potter, founder of R3 Funding. “We’re not going to see a huge crash, but there will be more losses than people are expecting,” he added.

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