Total Commercial/Multifamily Borrowing and Lending Expected to Drop 15% in 2023

According to an updated baseline forecast released on Monday (2-13-23) by the Mortgage Bankers Association (MBA) at the 2023 Commercial/Multifamily Finance Convention and Expo, total commercial and multifamily mortgage borrowing and lending is anticipated to decline by 15% to $684 billion in 2023, below the expected 2022 total of $804 billion.

The MBA says that multifamily lending alone (which is included in the total figures) is expected to drop to $384 billion in 2023—a 16% decline from last year’s anticipated total of $459 billion. MBA does expect that borrowing and lending will rebound in 2024 to $906 billion in total commercial real estate lending, with $486 billion of that total in multifamily lending.

Adding additional background and his analysis to the forecast, Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said:

“MBA’s updated forecast is built on a base case of economic weakness at the start of 2023 with a moderation in interest rates and an overall improvement in the economy as the year goes on. Given changes in interest rates and investment yields over the last year, new deals and loans are sizing differently than in previous years. These new changes will take time for buyers and sellers to digest, and we expect the logjam to suppress volumes this year.

We expect loan maturities and outstanding adjustable-rate loans to lead the testing of today’s market conditions. For long-term loans, the last decade has seen tremendous growth in property incomes and values – both of which will support properties’ abilities to support new loans. Properties with interest rate resets and shorter-term loans that transacted or refinanced more recently will be much more dependent on the particulars of that loan and property.”