The Mortgage Bankers Association (MBA) released an updated baseline forecast on the commercial and multi-family market August 29, showing renewed optimism for a market comeback. The MBA projects total commercial and multifamily mortgage borrowing and lending to finish the year at $539 billion — a 26% increase from 2023’s total of $429 billion.
Multifamily mortgage lending alone is projected to rise to $297 billion by the end of 2024 – up 21% from last year’s estimate of $246 billion. Total commercial real estate borrowing and lending is anticipated to increase to $665 billion, with $390 billion of that total in multifamily lending.
"The recent moderation in interest rates, coupled with the large volume of loans maturing in coming quarters, should prompt an uptick in mortgage borrowing from the low levels we’ve seen over the last two years,” MBA’s Head of Commercial Real Estate Research Jamie Woodwell said.
However, Woodwell could not definitively say when the bounce-back is expected to occur as it depends on how quickly property owners jump on long-term interest rates that are down significantly from where they were a year ago. Currently, not many property owners seem to be biting.
“Commercial mortgage originations have historically followed property prices, and the uncertainty about the future path of interest rates has been a contributing factor to the current slowdown — with many investors holding off selling or refinancing a property in the hope of lower rates,” Woodwell said.
Then again, since long term rates have declined, Woodwell believes investors will start to take action.
“Investors looking to shorter-term financing can also take solace in signs from the Federal Reserve that they will soon begin bringing down the short end of the curve,” he added.
