Commercial/Multifamily Borrowing Declines Year-Over-Year in Q3

On Tuesday (11-8-22), the Mortgage Bankers Association (MBA) reported the findings of its Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. According to the survey, commercial and multifamily mortgage loan originations declined 13% year-over-year in 2022 Q3.

When compared to 2021 Q3, a drop in originations for office, multifamily, and retail led to the overall decline in in commercial/multifamily lending volumes. Broken down by property types, offices decreased by 44%, multifamily by 16%, retail by 6%, and industrial by 4%. Lending backed by hotel properties increased 24%, and health care rocketed 61% higher.

Providing additional background and his analysis, MBA Head of Commercial Real Estate Research Jamie Woodwell said:

“After a strong first half of the year, rising interest rates and capitalization rates began to affect deal volume during the third quarter. Increasing yields across investment alternatives—including the 10-year Treasury yield more than doubling during the first nine months of the year—have shifted property financing and values, and it will take time for the market to full absorb these changes. Volatility has been equally impactful, making the sizing of transactions extremely difficult. The result has been the first of what may be many quarters of depressed borrowing and lending activity.”