The latest Mortgage Bankers Association (MBA) Commercial/Multifamily Real Estate Finance Forecast projects commercial and multifamily mortgage borrowing and lending will decline this year.
Total commercial and multifamily mortgage borrowing and lending is expected to fall to $700 billion, representing a 5 percent decrease from an expected 2022 total of $740 billion.
“The typical FOMC member’s expectations for the federal funds rate at the end of 2023 increased throughout 2022, jumping from 1.6 percent to 5.1 percent as of December 2022,” MBA Head of Commercial Real Estate Research Jamie Woodwell said. “Those shifts in outlook from the Federal Reserve are both a response to changing economic conditions and a cause of change themselves.”
Woodwell said commercial real estate markets are not immune to the shifts. The MBA expects borrowing and lending backed by commercial and multifamily properties to decline again this year.
“Uncertainty and volatility around the paths of the economy, interest rates, and property valuations will likely continue to cause instability for commercial real estate markets well into this year,” Woodwell said.
Per the MBA forecast, multifamily lending alone is expected to drop to $393 billion this year, and the Association anticipates borrowing and lending will rebound next year to $887 billion in total commercial real estate lending and $483 billion in multifamily lending.