Commercial/Multifamily Borrowing Declines 53% Year-Over-Year in Second-Quarter 2023

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Commercial and multifamily mortgage loan originations were 53% lower in the second quarter of 2023 compared to a year ago, and increased 23% from the first quarter of 2023, according to the Mortgage Bankers Association’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. 

“Commercial real estate borrowing and lending remained subdued in the second quarter of 2023,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Origination volumes picked up from the first quarter but were less than half the level of a very strong quarter a year earlier. Higher interest rates, uncertainty about property values and questions about some property fundamentals are all contributing to the slowdown. We expect the logjam to begin to break in coming quarters, but the path forward will depend on where interest rates and other aspects of the economy go from here.”

Originations Decrease 53% in the Second Quarter

Decreases in originations for all major property types led to the overall drop in commercial/multifamily lending volumes when compared to the second quarter of 2022. There was a 74% year-over-year decrease in the dollar volume of loans for health care properties, a 66% decrease for office properties, a 55% decrease for retail properties, a 55% decrease for industrial properties, a 48% decrease for multifamily loans and a 32% decrease for hotel properties.

Among investor types, the dollar volume of loans originated for depositories decreased by 69% year-over-year. There was a 60% decrease for investor-driven lenders, a 49% decrease in life insurance company loans, a 23% decrease for commercial mortgage-backed securities (CMBS), and an 11% decrease in the dollar volume of government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) loans.

Second-Quarter 2023 Originations Up 23% From First-Quarter 2023

On a quarterly basis, second-quarter originations for health care properties increased 44% compared to first-quarter 2023. There was a 37% increase in originations for multifamily properties, a 19% increase for industrial properties, and a 16% increase for office properties. Originations for retail decreased 13% and originations for hotel properties decreased 27%.

Among investor types, between the first and second quarter of 2023, the dollar volume of loans for life insurance companies increased 95%, loans for investor-driven lenders increased 46%, and originations for GSEs increased 22%. The dollar volume of loans for depositories increased by 4% and loans for CMBS decreased by 8%.

To view the report, please click here.