Commercial and multifamily mortgage loan originations were down 25 percent in the fourth quarter of 2023 compared to the same quarter a year ago, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
However, originations were up 13 percent from the third quarter of 2023.
“Borrowing and lending backed by commercial real estate remained subdued to close out 2023,” Jamie Woodwell, MBA’s head of commercial real estate research, said. “The fourth quarter saw a small pick-up from the previous quarter, as is usually the case, but was still down about 25 percent from 2022’s already suppressed fourth-quarter pace. For the year, mortgage originations were about 50 percent below 2022 levels, with every major property type and capital source experiencing a decline.”
The decline in mortgage originations year-over-year stemmed mainly from declines for office, heath care, multifamily, and industrial properties. Specifically, office properties saw a 68 percent year-over-year decrease in the dollar volume of loans, while health care properties saw a 39 percent decrease, multifamily properties had a 27 percent drop, and industrial properties experienced a 7 percent decrease.
On the other hand, retail properties increased 50 percent, and hotel property loan originations increased 81 percent, compared to the fourth quarter of 2022.
Compared to the third quarter of 2023, hotel properties saw a huge 131 percent spike in originations, while retail properties increased 91 percent. Also, there was a 72 percent increase for health care properties, and a 13 percent increase for multifamily properties. Industrial properties, however, saw an 11 percent decrease in originations, while office properties dropped 32 percent.
Overall, commercial mortgage originations were 47 percent lower in 2023 than they were in 2022. By property type, health care properties decreased 67 percent, office properties decreased 65 percent, industrial properties decreased 49 percent, multifamily properties dropped 46 percent, retail properties fell 27 percent, and hotel properties dropped 10 percent for the year.
The data was released at MBA’s 2024 Commercial/Multifamily Finance Convention and Expo this week..