- Hundreds of loans on office buildings are about to come due at a very bad time
- Loans were taken out in time of low interest rates and are now hard to refinance
- Too many of the loans defaulting could trigger banking crisis and hurt economy
Billions of dollars in loans on office buildings that are about to come due could play havoc with the US economy after interest rates soared.
About $117 billion worth is expected to be due this year and needs to be repaid or refinanced, according to the Mortgage Bankers Association.
A big chunk of it is at risk of defaulting and costing banks and developers huge sums, sending some into insolvency.
Owners of office space around the country took out their loans when interest rates were half what they are now, and may not be able to refinance them at higher ones.
Commercial mortgages, unlike home loans, are almost always paid interest-only, leaving the original price to be paid at the end, or refinanced to start the process again.
At the same time, revenue from office space fell as many businesses downsized their premises as many of their staff were working from home since the pandemic.
Economists last month found 40 per cent of office loans on bank…
