The continued rapid growth in CRE lending was accompanied by declines in securities holdings, home equity loans, and other consumer loans. This pattern of sustained and one-dimensional asset growth naturally raises questions about potential concentrations of credit risk in CRE loans.
These questions are most striking in markets where commercial vacancy rates are particularly high, where competition among lenders is most intense, or where potentially overheated home-price conditions have contributed to a sharp expansion in new-home construction.