Loan Originations for Commercial/Multifamily Properties Decline 53% Year-Over-Year in Q2

According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations released on Tuesday (8-15-23), commercial and multifamily originations were 53% lower in 2023Q2 compared to 2022Q2.

Declines in originations for all major property types led to the overall drop in commercial/multifamily lending volumes when compared to a year earlier. There was a 74% year-over-year decrease in the dollar volume of loans for health care properties, a 66% decline for office properties, a 55% decrease for retail and industrial properties, a 48% drop in multifamily loans, and a 32% decrease for hotel properties.

Among investor types, the dollar volume of loans originated for depositories fell 69% year-over-year. There was a 60% decrease in investor-driven lenders, a 49% decline in life insurance loans, a 23% decrease for commercial-backed securities (CMBS), and a 11% decline in the dollar volume of government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) loans.

Commenting on the report, MBA Head of Commercial Real Estate Research Jamie Woodwell said:

“Commercial real estate borrowing and lending remained subdued in the second quarter of 2023. Origination volumes picked up from the first quarter but were less than half the level of a very strong quarter a year earlier. Higher interest rates, uncertainty about property values, and questions about some property fundamentals are all contributing to the slowdown. We expect the logjam to begin to break in coming quarters, but the path forward will depend on where interest rates and other aspects of the economy go from here.”