Despite strong performance, commercial and multifamily volume drops annually
Commercial real estate (CRE) mortgage originations totaled $816 billion in 2022, the second-highest level on record.
While borrowing and lending activity remained strong last year, commercial loan volume was down 8% from the all-time high of $891 billion in 2021, according to the Mortgage Bankers Association (MBA). Compared to 2020, CRE origination volume was up 33% from $614 billion.
“Borrowing and lending backed by commercial and multifamily properties started 2022 strong but then dropped off because of rising interest rates, uncertainty about property values, and increased questions about the economy and some property fundamentals,” said Jamie Woodwell, head of commercial real estate research. “Despite the 8% annual decline, the $816 billion total volume was still the second highest on record. Bank lending ran against the trend, increasing by 12% to $409 billion.”
Commercial and multifamily mortgage bankers – excluding activity from smaller and mid-sized depositories not directly captured in MBA’s survey – financed $595 billion of loans in 2022. That’s 13% less than the $683.2 billion reported last year.
Multifamily properties posted the highest volume last year at $437 billion of the total lending figure and $333 billion of mortgage bankers’ originations. First liens comprised 93% of the mortgage bankers’ dollar volume closed.
Among capital sources, depositories were the largest funder, accounting for $408 billion of total commercial and multifamily lending in 2022 and $189 billion of mortgage bankers’ originations. Government-sponsored enterprises Fannie Mae and Freddie Mac were the second-highest with a total volume of $128 billion, followed by life insurance company and pension funds, private label CMBS, and investor-driven lenders.
“A key question for 2023 is when the market will have stabilized enough for the logjam in new deal activity to break,” Woodwell said.
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