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Nationwide commercial and multifamily mortgage lending is expected to fall this year by 15 percent, according to an updated forecast from the Mortgage Bankers Association.
The MBA said in a statement that it has updated its baseline forecast for commercial and multifamily mortgages to $684 billion in 2023, a 15 percent decline from $804 billion, the expected total for 2022. The MBA released its forecast this week at its 2023 Commercial/Multifamily Finance Convention and Expo.
The amount of lending just for multifamily properties is expected to drop by 16 percent, from an expected total of $459 billion in 2022 to $384 billion in 2023.
Jamie Woodwell, MBA’s head of commercial real estate research, said the MBA’s updated forecast was based on the economic weakness at the start of 2023 with a moderation in interest rates and an overall improvement in the economy as the year goes on.
“Given changes in interest rates and investment yields over the last year, new deals and loans are sizing differently than in previous years,” Woodwell said in the statement. “These new changes will take time for buyers and sellers to digest, and we expect the logjam to suppress volumes this year.”
The MBA anticipates the amount of borrowing and lending will rebound in 2024. The trade organization expects $906 billion in total commercial real estate lending next year, with $486 billion of that amount in multifamily lending.
The MBA also expects commercial mortgages to test the current market.
“We expect loan maturities and outstanding adjustable-rate loans to lead the testing of today’s market conditions. For long-term loans, the last decade has seen tremendous growth in property incomes and values – both of which will support properties’ abilities to support new loans,” Woodwell said. “Properties with interest rate resets and shorter-term loans that transacted or refinanced more recently will be much more dependent on the particulars of that loan and property.”
