Commercial and Multifamily Lending Poised for a 26% Increase in 2024

Article originally posted on Multifamily Executive on September 4, 2024

Commercial and multifamily borrowing and lending is expected to see a 26% increase from last year’s total of $429 billion. The Mortgage Bankers Association (MBA) in its updated baseline forecast is calling for the year’s total to be $539 billion.

For multifamily lending alone, the MBA expects a 21% year-over-year increase—growing to $297 billion this year from last year’s estimate of $246 billion.

Looking ahead, the MBA expects commercial real estate borrowing and lending will increase to $665 billion in 2025, with multifamily lending comprising $390 billion of that total.

“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,” said Jamie Woodwell, MBA’s head of commercial real estate research.

He noted that the exact timing of this return will depend on how quickly property owners move on long-term interest rates that are down significantly from a year ago.

“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 slowdown—with many investors holding off selling or refinancing a property in the hope of lower rates,” Woodwell added. “With longer-term rates now lower, many of those players are likely 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.”

Signs have been pointing to the Federal Reserve cutting rates at its September meeting after eight consecutive rate pauses.