Amid higher interest rates and economic uncertainty, the Mortgage Bankers Association (MBA) has issued an updated forecast that anticipates total commercial and multifamily mortgage borrowing and lending to hold steady this year at a projected $895 billion, roughly in line with 2021’s $891 billion.
“The economic and interest rate outlook has shifted since MBA’s last updated commercial real estate finance forecast in February,” said Jamie Woodwell, vice president for commercial real estate research. “The rapid rise in interest rates is expected to take some wind out of the sails of new lending activity, but healthy property fundamentals and strong property values should support the markets and keep commercial real estate mortgage demand at strong levels. Borrowing and lending should still match last year’s levels.”
However, MBA’s updated forecast predicts that multifamily lending alone is expected to decrease to $418 billion this year, an 11% drop from 2021’s estimated record of $470 billion.
“Multifamily lending is expected to remain robust during the rest of 2022 but is now expected to fall short of 2021’s record-high volumes,” added Woodwell.
Looking ahead to 2023, MBA anticipates that borrowing and lending will grow to almost $950 billion for commercial real estate lending, including $442 billion in multifamily lending.
Record Highs in 2021
The MBA also released its total lending tallies for 2021. According to its 2021 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation, the $683.2 billion in commercial and multifamily mortgages closed last year was 55% higher than the $441.5 billion reported in 2020.
Total commercial real estate mortgage lending estimates for the year, including activity from smaller and midsized depositories not captured in MBA’s survey, equaled $890.6 billion, a 45% increase over 2020’s $614 billion and a 25% increase over the previous annual record of 2019’s $713 billion.
“Improving property fundamentals and strong price appreciation drove borrowing and lending backed by commercial and multifamily properties to new highs in 2021, with strong activity from every capital source,” said Woodwell. “Lending was 48% higher than any previous annual total for industrial properties and 31% higher for multifamily properties. Despite bounce-backs from low 2020 volumes, lending for other major property types remained below previous highs.”
According to the MBA, multifamily properties saw the highest volume of mortgage bankers’ originations in 2021 at $376 billion, followed by office buildings, industrial properties, retail, hotel/motel, and health care.
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