Commercial and multifamily mortgage originators anticipate 2022 will be another strong year of borrowing and lending, according to the Mortgage Bankers Association‘s (MBA) 2022 Commercial Real Estate Finance (CREF) Outlook Survey.
Every top commercial/multifamily firm polled expects originations to increase in 2022, with almost two-thirds (63%) expecting an overall increase of 5% or more across the entire market. When forecasting just their own firm’s originations, three-out-of-four (74%) expect to see an increase in lending of 5% or more this year.
“Commercial and multifamily mortgage professionals are bullish on 2022,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “After a strong market bounce-back in 2021, top mortgage bankers expect the momentum to continue in 2022 – with borrowing and lending increasing for every major capital source. Industry leaders are optimistic about changes coming from industrial, apartment and retail market fundamentals, the broader economy, increased focus on ESG, and new construction activity. At the highest level, the market sees a strong availability of debt relative to the number of deals looking for it.”
“A majority of respondents see inflation, the trajectory of short- and long-term interest rates, legislative and regulatory changes, remote work’s impact on the office sector, and the ongoing pandemic as potential impacts on the industry during the year,” adds Woodwell.
The 2022 CREF Outlook Survey results show lenders remain eager to make loans. All surveyed originators reported that in 2021, lenders had a “strong” or “very strong” appetite to make new loans, and all expect lenders’ appetite in 2022 to be “strong” or “very strong.” Borrowers are still eager to take out loans as well. All surveyed originators reported that borrowers had “strong” or “very strong” appetites to take out new loans last year, and 94 percent expect borrowers’ appetites this year to be “strong” or “very strong.”
All surveyed originators expect the market to grow in 2022, with 63% expecting total market originations to increase 5% or more. Seventy-four percent expect their own originations to increase by 5% or more. Loan returns are generally expected to remain muted, and risks to hold steady. Majorities of originators expect there to be upward pressure on interest rates, and for capitalization rates to remain flat.
Industrial, apartment and retail market fundamentals, the broader economy, increased focus on ESG, and new construction activity are seen by most respondents as having potentially positive impacts on the markets in the coming year.
Changes in inflation, long-term interest rates, legislative changes, work from home, short-term interest rates, changes in the severity of the pandemic, and regulatory changes are seen by most respondents as having negative impacts on the markets in the coming year.
Read the detailed survey results here.
MBA’s 2022 CREF Outlook Survey was conducted between December 1 and December 15, 2021. The survey request was sent to leaders of 70 of the top commercial/multifamily mortgage origination firms, as determined by MBA’s 2020 Annual Origination Rankings Report. The survey had a response rate of 46%. Percentages shown are calculated based on applicable responses. Non-responses and “N/A” responses are excluded from the percentage denominator.