Total commercial real estate mortgage borrowing and lending during 2023 was estimated to have totaled $429 billion, according to data from the Mortgage Bankers Association (MBA). Last year’s total was down 47% from the $816 billion in 2022 and down 52% from the record $891 billion in 2021.
Excluding activity from smaller and mid-sized depositories not directly captured, MBA’s survey tracked $306 billion of loans closed by dedicated commercial mortgage bankers in 2023, down 49% from $595 billion in 2022.
Among different property types, multifamily properties saw the highest volume last year, with an estimated $264 billion of total lending and $178 billion directly tracked by dedicated mortgage bankers. First liens accounted for 96% of the mortgage bankers’ dollar volume closed.
Dedicated mortgage banking firms reported closing $306 billion of commercial real estate loans in their own names and serving as intermediaries on $225 billion. Firms reported serving as investment sales brokers for $225 billion of deals.
Depositories were the leading capital source of the sector’s mortgage debt, followed by life insurance companies and pension funds, government-sponsored enterprises, private label CMBS, and investor-driven lenders.
“Higher interest rates, uncertainty about property values, and questions about some properties’ fundamentals led to a steep fall-off in borrowing and lending backed by commercial real estate last year,” said Jamie Woodwell, MBA’s head of commercial real estate research. “The declines were broad-based, covering every major property type and capital source. The sustained growth in the amount of CRE mortgage debt outstanding signals that much of the drop in originations was driven by a decline in borrower demand stemming from slowdowns in sales transactions and refinances. If property owners had the ability to sit pat, they generally did.”
Woodwell added that although “higher interest rates are likely to continue to act as a deterrent for many property owners, more than $900 billion of maturities – and perhaps acquiescence to those higher rates – are likely to bring some additional deals to the market this year.”
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