MBA delivers 2023 commercial, multifamily lending forecast

Slowdown is likely to persist through much of this year

MBA delivers 2023 commercial, multifamily lending forecast

The Mortgage Bankers Association has published its latest commercial and multifamily real estate finance forecast, noting a further slowdown in lending transactions in 2023.

MBA expects total commercial and multifamily mortgage borrowing and lending to decline $654 billion this year, a 20% plunge from $816 billion in 2022. Within the total figures, multifamily lending alone is projected to drop to $375 billion in 2023, down 14% from last year’s expected total of $437 billion.

“Higher interest rates, uncertainty about property values, and questions about the outlook for the cash flows of some properties led to a slowdown in commercial real estate transactions and financing beginning in the middle of 2022,” said Jamie Woodwell, MBA’s head of commercial real estate research.

In a blog commentary, Woodwell noted sales activity in the first quarter was down 56% year over year as delinquency rates rose and underwriting standards for commercial and multifamily mortgages continued to tighten.

Still, MBA anticipates borrowing and lending to bounce back in 2024 to $829 billion in total commercial real estate lending, with $456 billion of that total in multifamily lending.

“That slowdown is likely to persist through much of this year as investors, lenders, and others look for greater transparency into the markets,” Woodwell said. “We expect maturing loans to begin to break the logjam and provide greater clarity as this year goes on. However, it may take until 2025 for volumes to get back to previous years’ levels.” 

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