The Mortgage Bankers Association (MBA) expects total commercial and multifamily mortgage borrowing and lending to decrease to $733 billion in 2022, down 18% from last year’s total of $891 billion, according to its updated baseline forecast. Multifamily lending on its own is expected to decrease to $436 billion this year, a 10% drop from 2021’s record $487 billion.
However, the MBA does expect a rebound in borrowing and lending next year, predicting $872 billion in total commercial real estate lending and $454 billion in multifamily lending for 2023.
“The rapid changes taking place across space, equity, and debt markets are having a significant effect on commercial and multifamily real estate transaction volumes,” said Jamie Woodwell, MBA’s vice president for commercial real estate research. “After a record start to the year, we expect that the rise in rates, ongoing uncertainty about supply and demand balances among some property types, and concerns about the direction of the economy will suppress new loan originations in the second half of the year. 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.”
Woodwell added that the direction of the economy, which remains uncertain at the time, will be a 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.”