Commercial/Multifamily Borrowing Declines 53 Percent Year-Over-Year in the Second Quarter 2023

WASHINGTON, D.C. (August 15, 2023) — Commercial and multifamily mortgage loan originations were 53 percent lower in the second quarter of 2023 compared to a year ago, and increased 23 percent from the first quarter of 2023, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. 

“Commercial real estate borrowing and lending remained subdued in the second quarter of 2023,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “Origination volumes picked up from the first quarter but were less than half the level of a very strong quarter a year earlier. Higher interest rates, uncertainty about property values, and questions about some property fundamentals are all contributing to the slowdown. We expect the logjam to begin to break in coming quarters, but the path forward will depend on where interest rates and other aspects of the economy go from here.”

 ORIGINATIONS DECREASE 53 PERCENT IN THE SECOND QUARTER OF 2023

Decreases in originations for all major property types led to the overall drop in commercial/multifamily lending volumes when compared to the second quarter of 2022. There was a 74 percent year-over-year decrease in the dollar volume of loans for health care properties, a 66 percent decrease for office properties, a 55 percent decrease for retail properties, a 55 percent decrease for industrial properties, a 48 percent decrease for multifamily loans, and a 32 percent decrease for hotel properties.

Among investor types, the dollar volume of loans originated for depositories decreased by 69 percent year-over-year. There was a 60 percent decrease for investor-driven lenders, a 49 percent decrease in life insurance company loans, a 23 percent decrease for commercial mortgage-backed securities (CMBS), and a 11 percent decrease in the dollar volume of government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) loans.

On a quarterly basis, second-quarter originations for health care properties increased 44 percent compared to first-quarter 2023. There was a 37 percent increase in originations for multifamily properties, a 19 percent increase for industrial properties, and a 16 percent increase for office properties. Originations for retail decreased 13 percent and originations for hotel properties decreased 27 percent.

Among investor types, between the first and second quarter of 2023, the dollar volume of loans for life insurance companies increased 95 percent, loans for investor-driven lenders increased 46 percent, and originations for GSEs increased 22 percent. The dollar volume of loans for depositories increased by 4 percent and loans for CMBS decreased by 8 percent.

To view the report, please click here.