Economic Uncertainty and Higher Interest Rates to Slow Commercial and Multifamily Lending in Second Half of 2022

According to the updated baseline forecast released by the Mortgage Bankers Association (MBA) on Wednesday (7-19-22), total commercial and multifamily mortgage borrowing and lending is expected to decline to $733 billion this year, down 18% from 2021 totals of $891 billion.

Multifamily lending alone (which is included in the total figures) is expected to fall to $436 billion in 2022. This is a 10% decline from last year’s record of $ 487 billion. The MBA does anticipate, however, that borrowing and lending will rebound in 2023 to $872 billion in total commercial real estate lending and $454 billion in multifamily lending.

Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, offered his analysis of the recently released data:

“The rapid changes taking place across space, equity, and debt markets are having a significant effect on commercial and multifamily real estate transaction volumes.” … “The direction of the economy, which remains uncertain, will be a major driver of the magnitude and timing of market changes. 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.”