"The rapid rise in interest rates is expected to take some wind out of the sails of new lending activity"
While commercial and multifamily mortgage activity is expected to remain strong in 2022, these sectors will still feel a slight sting from rapidly soaring rates and economic uncertainty, according to the Mortgage Bankers Association.
In its latest report, the MBA projects that commercial and multifamily mortgage borrowing and lending will remain relatively stable at $895 billion of total lending in 2022 – not far off from last year’s total volume of $891 billion.
“Multifamily lending is expected to remain robust during the rest of 2022 but is now expected to fall short of 2021’s record-high volumes,” said Jamie Woodwell, vice president for commercial real estate research at MBA.
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Multifamily lending is forecast to fall 11% from $470 billion in 2021 to $418 billion in 2022. However, MBA anticipates borrowing and lending to regain traction in 2023, with roughly $950 billion of total commercial real estate lending and $442 billion in multifamily lending.
“The economic and interest rate outlook has shifted since MBA’s last updated commercial real estate finance (CREF) forecast in February,” Woodwell said. “The rapid rise in interest rates is expected to take some wind out of the sails of new lending activity, but healthy property fundamentals and strong property values should support the markets and keep commercial real estate mortgage demand at strong levels. Borrowing and lending should still match last year’s record levels.”
