Total commercial and multifamily mortgage borrowing and lending is expected to fall to $733 billion this year, down 18% from 2021 totals ($891 billion), according to an updated baseline forecast from the Mortgage Bankers Association (MBA).
“The rapid changes taking place across space, equity and debt markets are having a significant effect on commercial and multifamily real estate transaction volumes,” says Jamie Woodwell, MBA’s vice president for commercial real estate research. “After a record start to the year, we expect that the rise in rates, ongoing uncertainty about supply and demand balances among some property types, and concerns about the direction of the economy will suppress new loan originations in the second half of the year.”
Multifamily lending alone (which is included in the total figures) is expected to drop to $436 billion in 2022 – a 10% decline from last year’s record of $487 billion. MBA anticipates borrowing and lending will rebound in 2023 to $872 billion in total commercial real estate lending and $454 billion in multifamily lending.
“Most commercial real estate market fundamentals remain strong, with significant increases in the incomes and values of many properties in recent years,” continues Woodwell. “These factors are why MBA expects loan demand to begin to bounce back in 2023 and 2024.”
“The direction of the economy, which remains uncertain, will be a major driver of the magnitude and timing of market changes,” concludes Woodwell. “Should the economy enter a recession, which – if it were to happen – would most likely come in the first half of 2023, commercial and multifamily borrowing and lending would likely be further constrained.”