The amount of commercial real estate loans held by banks grew at the end of April, showing improvement for the first time in over a year. Banks burdened by troubled loans have been ridding themselves of their real estate debt, which they feel leaves them too exposed, at the same time that new lending has been in short supply. The result is that the amount of commercial real estate loans held by banks fell by nearly $300 billion, down from its peak of $1.73 trillion in 2008.
Banks are showing increased enthusiasm to make new commercial mortgages, and competing with firms that make loans made for commercial mortgage backed securities. In the future, this may lead to the amount of new loans being created taking over the old debt being retired or sold off.