Total commercial and multifamily mortgage borrowing and lending are expected to fall to $766 billion this year, down 14 percent from 2021 totals ($891 billion). This is according to an updated baseline forecast released today by the Mortgage Bankers Association (MBA).

Multifamily lending alone (which is included in the total figures) is expected to drop to $455 billion in 2022—a 7 percent decline from last year’s record of $487 billion. MBA anticipates borrowing and lending will rebound in 2023 to $848 billion in total commercial real estate lending and $451 billion in multifamily lending.

“We continue to see significant changes, volatility, and uncertainty in the space, equity, and debt markets that drive commercial real estate values and transaction volumes,” said Jamie Woodwell, MBA’s vice president for commercial real estate research. “There was a record level of borrowing and lending during the first half of this year. Given market changes, we forecast a significant slowdown in the second half of the year—driven by rising interest rates and capitalization rates and uncertainty among buyers, sellers, and other stakeholders about where market values may lie. As we have noted before, most commercial real estate market fundamentals remain strong, with significant increases in the incomes and values of many properties in recent years. These factors are why MBA expects loan demand to begin to bounce back in 2023 and 2024.”

Woodwell continued, “MBA’s CREF Forecast is based on our baseline economic forecast, but the outlook is particularly uncertain right now. Different macroeconomic paths could lead to very different outcomes around the demand for and supply of commercial mortgage debt. Should the economy enter a recession, which has become considerably more likely, commercial and multifamily borrowing and lending would likely be further constrained.”