Be CarefulThe Globe and Mail reports in its Friday edition that the banking regulator is warning that higher interest rates and a deteriorating commercial real estate market are inflating risks at Canada's largest lenders. The Globe's Stefanie Marotta writes that in an update to its annual risk outlook released Thursday, the Office of the Superintendent of Financial Institutions said that the rising cost of borrowing is putting greater pressure on the ability of consumers and companies to pay down their debt. It also cited mounting issues in commercial real estate as high rates cool the construction market and office vacancies rise. In April, OSFI outlined nine key risks. The potential for a housing market downturn and commercial real estate risks topped the list. Offices make up a small portion of the banks' loan portfolios, comprising about 10 per cent of their commercial real estate books and about 1 per cent of their total loans. However, many of Canada's biggest banks cited increasing credit risk in commercial real estate when they reported third-quarter earnings in late August. RBC booked provisions for credit losses in office and multifamily segments, while CIBC booked impairments in its U.S. office space portfolio.