Real Estate

Commercial real estate a bigger risk than previously thought: OSFI

Top banking regulator flags co-lending arrangements and lagging ratings changes among heightened risks

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Canada’s top banking regulator is flagging commercial real estate lending as a bigger risk than previously thought as higher interest rates persist and a practice known as co-lending increases.

The Office of the Superintendent of Financial Institutions warned in an Oct. 12 update to its list of the highest risks facing the sector that valuations in a fast-changing landscape could quickly become outdated and that trends including co-lending could increase default risks and recovery values.

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