Forecast: Stabilization of Commercial and Multifamily Mortgage Markets in 2024

Last Updated on January 10, 2024 by Robert C. Hoopes

Title: Survey Predicts Unsettled, yet Stabilizing, Commercial Real Estate Mortgage Market in 2024

The Mortgage Bankers Association (MBA) recently released its Commercial Real Estate Finance (CREF) Outlook Survey for 2024, providing insights into the state of the commercial and multifamily mortgage market for the upcoming year. The survey results revealed that while the market is expected to remain unsettled, it is likely to stabilize over the course of 2024.

Over 90% of the respondents in the survey viewed the current market as unsettled, with concerns primarily focused on the office market. The negative impact of the office market on borrowing and lending was a prevailing concern. However, the outlook for the industrial market was viewed more positively, indicating potential growth in that sector.

Various factors such as cap rates, valuations, base interest rates, and rate volatility are expected to have a negative impact on financing activity throughout the year. Furthermore, lenders are expected to demonstrate a slightly stronger appetite for lending compared to borrowers’ willingness to borrow.

Despite the market’s uncertain conditions, the survey predicts that borrowing and lending volumes will increase in 2024. Specific capital sources, however, elicited varying expectations among respondents.

One significant finding of the survey was the discrepancy in views regarding whether the supply of or demand for debt is greater. This indicates a lack of consensus among industry leaders on the current state of debt availability within the commercial/multifamily mortgage sector.

In the third quarter of 2023, the commercial/multifamily mortgage sector witnessed a $37.1 billion (0.8%) increase in debt outstanding, reaching a staggering $4.63 trillion by the end of the quarter. Despite a decline in borrowing, the level of commercial mortgage debt outstanding continues to rise, albeit at a slower pace than in previous years.

The MBA CREF Outlook Survey for 2024 was conducted between November 30 and December 15, 2023, with a response rate of 40% from influential leaders within 60 of the top commercial and multifamily mortgage origination firms.

As we enter 2024, the commercial and multifamily mortgage market anticipates a period of stabilization amidst continued uncertainty. Industry leaders are closely monitoring market trends, while borrowers and lenders navigate the challenges to capitalize on the opportunities presented within this evolving landscape.