Where banks’ multifamily exposure is causing the most ’acute risk’

In this episode, Brian Thies and Christopher Wolfe of Fitch Ratings speak with PERE Americas editor Miriam Hall about the outlook for multifamily real estate in the US and how banks may be exposed.

Banks’ multifamily lending has grown 32 percent since the end of 2019, per a Fitch report last month, to hit $613 billion at the end of 2023. That is a complicating factor for some regional banks, especially those with significant exposure to rent-controlled assets or areas facing oversupply. “The performance is still looking good, but that growth is probably masking what's underneath,” Wolfe said on the show.

Theis said it is an asset that has “flown under the radar” to a certain extent. “It's a class within CRE that has seen significant growth over the last four years – and as such, most of that was underwritten at extremely low interest rates,” he added. “So now, as a lot of that is coming up for refinance, it's doing so at significantly higher rates.”

PERE’s April cover examines outlook for multifamily, which you can read here.