As a recent study out of the New York Fed stated, "banks 'extended-and-pretended' their impaired CRE mortgages in the post-pandemic period to avoid writing off their capital, leading to credit misallocation and a buildup of financial fragility." "Extend-and-pretend crowds out new credit provision, leading to a 4.8–5.3 percent drop in CRE mortgage origination since 2022:Q1 and fuels the amount of CRE mortgages maturing in the near term," the researchers wrote. "As of 2023:Q4, this 'maturity wall' represents 27 percent of bank capital." The FT reported that while the percentage of nearly $2 trillion in CRE loans banks have lent that have fallen into delinquency, it's still $26 billion, a 25% increase during the first three quarters of 2024. A Moody's examination found banks offered little in payment breaks. Instead, borrowers could delay missed payments. "They are kicking the can down the road," Ivan Cilik, a principal with accounting firm Baker Tilly's financial services group, told the FT. "I think lenders are trying to work out the problems with these loans, but if rates don't come down borrowers are not going to be able to make payments." "We are in the early part of the curve," Cilik said. "If we continue to see rising delinquencies, we will know that these modifications are just not working out." https://lnkd.in/eggV4NX8