Total Commercial/Multifamily Borrowing and Lending Expected to Decrease 14% Year-Over-Year

According to an updated baseline forecast released on Tuesday (10-4-22) by the Mortgage Bankers Association (MBA), total commercial and multifamily mortgage borrowing and lending is anticipated to fall to $766 billion this year, down 14% from $891 billion in 2021.

Multifamily lending alone (which is included in the total figure) is expected to decline to $455 billion in 2022. This represents a 7% decline from last year’s record of $487 billion. On the other hand, the MBA says it anticipates borrowing and lending will rebound in 2023 to $848 billion in total commercial real estate lending, and $451 billion of that amount will be in multifamily lending.

Adding additional background to the updated forecast, Jamie Woodwell, MBA’s Vice-President for Commercial Real Estate Research, said:

“We continue to see significant changes, volatility, and uncertainty in the space, equity, and debt markets that drive commercial real estate values and transaction volumes. There was a record level of borrowing and lending during the first half of this year. Given market changes, we forecast a significant slowdown in the second half of the year—driven by rising interest rates and capitalization rates and uncertainty among buyers, sellers, and other stakeholders about where market values may lie. As we have noted before, most commercial real estate market fundamentals remain strong, with significant increases in the incomes and values of many properties in recent years. These factors are why MBA expects loan demand to begin to bounce back in 2023 and 2024.

MBA’s CREF Forecast is based on our baseline economic forecast, but the outlook is particularly uncertain right now. Different macroeconomic paths could lead to very different outcomes around the demand for and supply of commercial mortgage debt. Should the economy enter a recession, which has become considerably more likely, commercial, and multifamily borrowing and lending would likely be further constrained.”