News
2016 Loan Growth Led By Construction And Development, Concerning Regulators
Among lending categories, construction and development led the U.S. economy in loan growth for the second consecutive year in 2016.
U.S. C&D bank lending increased 14% last year, beating out 2015’s 13% growth and far outpacing the total loan growth of 5%. Many regulators are expressing concern over the increase in lending to a higher risk sector, CoStar reports. Regulators increased scrutiny of C&D commercial real estate exposure last year by reviewing underwriting, monitoring practices and unveiling more strenuous stress tests.
On the plus side, Kroll Bond Rating Agency said bank C&D loan exposure remains below pre-crisis levels, and total C&D bank loans accounted for a mere 3.4% of all 2016 loans, compared to 2007's high of 8.4%.
