MBA: Commercial/Multifamily Lending Expected to Fall in 2022 Amid Ongoing Economic Uncertainty
The Mortgage Bankers Association, in an updated baseline forecast, said total commercial and multifamily mortgage borrowing and lending is expected to fall to $766 billion this year, down 14 percent from 2021 totals ($891 billion).
Multifamily lending alone (which is included in the total figures) is expected to drop to $455 billion in 2022 – a 7 percent decline from last year’s record $487 billion. MBA anticipates borrowing and lending to rebound in 2023 to $848 billion in total commercial real estate lending and $451 billion in multifamily lending.
“We continue to see significant changes, volatility and uncertainty in the space, equity and debt markets that drive commercial real estate values and transaction volumes,” said Jamie Woodwell, MBA Vice President for Commercial Real Estate Research. “There was a record level of borrowing and lending during the first half of this year. Given market changes, we forecast a significant slowdown in the second half of the year – driven by rising interest rates and capitalization rates and uncertainty among buyers, sellers, and other stakeholders about where market values may lie. As we have noted before, 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 noted the MBA CREF Forecast is based on MBA’s baseline economic forecast, but the outlook is particularly uncertain right now. “Different macroeconomic paths could lead to very different outcomes around the demand for and supply of commercial mortgage debt,” he said. “Should the economy enter a recession, which has become considerably more likely, commercial and multifamily borrowing and lending would likely be further constrained.”
For additional commentary on the pandemic’s impact on the sector, visit MBA’s Commercial/Multifamily Market Intelligence Blog. MBA’s commercial/multifamily members can download a copy of MBA’s latest Commercial/Multifamily Real Estate Finance Forecast at www.mba.org/crefresearch.