The high level of corporate debt and elevated valuations in commercial real estate going into this crisis, combined with prolonged uncertainties and changes in the way we shop and work, could lead to higher-than-expected losses on loans to some of these businesses.
Consumer lending and residential mortgages seem to be holding up well so far, which may reflect the relatively high quality of household credit going into the COVID event. However, the performance of these loans also needs to be watched closely in light of the forbearance policymakers have encouraged and the possibility of a reduction in fiscal support for households.