The Commercial Real Estate Market and Financial Stability

The commercial real estate market plays a key role in financial stability. The financial position of commercial firms is currently satisfactory, but many firms are vulnerable to higher interest rates and weaker economic growth.

In a scenario with financial stress, problems in the commercial real estate sector could cause significant credit losses for the Swedish banks. The capital held by the banks for risks in their commercial real estate lending does not cover the losses that may occur under such a stress. Even if the banks' total capital and resilience are satisfactory, FI believes that the banks need more capital to cover the risks in their commercial real estate lending.

Therefore, in the autumn of 2019, FI will decide on measures that will require banks to hold capital that covers the risks in lending to commercial real estate firms.

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