Refinancing Risk Mounts as Two-Thirds of Bank CRE Loans Come Due This Year Article originally posted on Globe St. on September 11, 2025 A looming cluster of commercial real estate maturities is shaping up to be one of the biggest tests for U.S. banks in recent memory. Recent analysis from Moody’s reveals that almost 63% of banks’ CRE loans are set to mature by the end of 2025—a figure that matches the “tangible common equity” held by these institutions. With refinancing pipelines already under strain from higher interest rates and ongoing market pressure, Moody’s analysts warned in a recent podcast that this concentration risk could easily translate into wider financial stress if macroeconomic conditions deteriorate further. This fresh data emerged from Moody’s deep dive into the portfolios of 60 banks, notable for both its comprehensiveness and its implications. Steven Lynch, vice president and senior credit officer at Moody’s Ratings, emphasized that while some banks have made modest reductions in exposures to riskier loan attributes, “there are still some material concentration risks here.” Lynch continued, “Many banks still have a large proportion of their overall CRE loans maturing through year-end 2025. It’s about equal to 63% of the tangible common equity for the median bank.” The weight of this refinancing wall is significant enough to force banks and borrowers alike into short-term extensions, with many opting for six- to twelve-month rollovers as “lenders look for capital markets to resume to more normal financing activity or takeout activity for loans to be originated elsewhere.” Moody’s analysis found that lenders are proactively identifying loans most vulnerable to refinancing challenges, preparing to work with borrowers on viable solutions ahead of maturity dates. However, refinancings remain a high-wire act in the current environment. “Interest rates have remained higher for longer,” Lynch noted, “and our expectations for rate cuts keep on getting pushed out.” Many in the CRE world, as analysts suggest, are holding out for rate cuts to return before the 2025 maturities necessitate new financing at far less favorable terms than those seen in the pre-pandemic world. The implications for banks are multifaceted. DSCRs have come under pressure as property net operating incomes fail to keep pace with servicing costs, pinched further by sustained high rates. “DSCRs are being compressed,” observed Lynch, linking the phenomenon not only to the broader economic context but also to legacy issues in construction and land loans that have historically triggered substantial credit losses during recessions. The sector’s complexity is underscored by the fact that CRE is anything but monolithic; office properties, for instance, face rising vacancy rates, currently around 20% nationally—some five percentage points above pre-COVID levels—with further increases anticipated as tenants consolidate and adapt to hybrid work models. Moody’s analysts argue that the industry’s lines of defense center on strong capital buffers and careful liquidity management—banks that “build and retain higher amounts of capital liquidity” are best positioned to offset looming risks. Nevertheless, the rating agency’s recent actions, which saw eight regional banking groups placed on review for downgrade and 13 others affirmed with some outlook changes, spotlight the seriousness with which concentration risk is being viewed across the sector. As lenders, investors and borrowers approach a pivotal year, the sheer concentration of CRE maturities in 2025 stands out not just as a statistic, but as a warning. If credit conditions tighten or refinancing options become more limited, the consequences could ripple far beyond whoever is holding the next stack of maturing notes.