MBA Career: Anticipated 46% Drop in Commercial Loans in 2023

Last Updated on October 24, 2023 by Robert C. Hoopes

Title: Commercial and Multifamily Mortgage Borrowing and Lending Expected to Decline in 2023, says MBA

The Mortgage Bankers Association (MBA) has forecasted a significant decline in commercial and multifamily mortgage borrowing and lending for the year 2023. The projected decline amounts to a staggering 46%, with total borrowing and lending falling from last year’s figure of $816 billion to a predicted $442 billion.

The commercial real estate market has been facing numerous challenges since last summer, leading to a logjam in borrowing and lending activity. Factors such as supply and demand dynamics, rising interest rates, and low transaction numbers are major contributors to the decline in demand for new mortgages.

According to the MBA, multifamily lending is expected to experience a 41% decline this year. The borrowing amount is projected to drop to $285 billion, a considerable decrease from the previous year’s $480 billion. The forecasted decline suggests that potential homebuyers and investors in this sector may be holding back due to the uncertain market conditions.

However, the MBA remains optimistic about the future. The association forecasts an increase in borrowing and lending activity by 2024, with a projected total of $559 billion in commercial real estate lending, including $339 billion for multifamily lending. This positive outlook is subject to the stabilization of interest rates and cap rates, which are currently major factors impacting the market.

The uncertainty surrounding the future path of interest rates has been identified as one of the key contributing factors to the current slowdown in mortgage activity. The MBA suggests that a decline in interest rates and cap rates would provide a boost to property values and promote borrowing, thereby stimulating activity in the market. Conversely, if rates remain high, activity is likely to remain suppressed.

For further analysis and insights on the forecasted decline in borrowing and lending, MBA’s Commercial/Multifamily Market Intelligence Blog offers additional commentary and information. This valuable resource provides industry professionals and stakeholders with a comprehensive view of the market and its future prospects.

Originally published in 2023 by Florida Realtors®, this news article sheds light on the current state of commercial and multifamily mortgage borrowing and lending. The data and insights provided by the MBA serve as an essential resource for individuals pursuing careers in the field of MBA and those interested in real estate investment and finance.