MBA Forecasts 46% Decline In Commercial And Multifamily Mortgage Activity For 2023

The Mortgage Bankers Association (MBA) is forecasting $442 billion in total commercial and multifamily mortgage borrowing and lending for 2023, a 46% drop from the $816 billion generate in 2022. Multifamily lending alone – which is included in the total figures – is expected generate $285 billion this year, down by 41% from last year’s total of $480 billion.

Looking ahead, the MBA is predicting borrowing and lending for this sector in 2024 will increase to $559 billion, with $339 billion of that total in multifamily lending.

“The logjam in the commercial real estate markets that began last summer has remained firmly in place,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Questions about supply and demand dynamics for some properties, the rise and volatility in interest rates, and the low number of transactions and coinciding lack of price discovery have all contributed to a marked decline in demand for new mortgages. Unfortunately, those and other factors will likely continue to exert downward pressure on borrowing and lending volumes in the coming quarters.”

The MBA also noted that delinquency rates for mortgages backed by commercial and multifamily properties increased during the third quarter of this year. Loans backed by office properties drove the increase – 5.1% of the balance of office property loans were delinquent, up from 4% at the end of last quarter.

The trade group also pointed out that 5% of the balance of retail loan balances were delinquent, up from 4.9%, while 4.9% of the balance of lodging loans were 30 days or more delinquent, down from 5.3%. Only 0.9% of multifamily balances and 0.6% of the balance of industrial property loans were delinquent.

“The delinquency rate for loans backed by commercial properties has now increased for four consecutive quarters,” said Woodwell. “The delinquency rate for loans backed by office properties now exceeds those of loans backed by retail and hotel properties, while the delinquency rates for multifamily and industrial property loans remain below 1%.”