MBA Forecasts Significant CRE Lending Growth This Year

In a newly released forecast, the Mortgage Bankers Association (MBA) predicts a robust increase in commercial and multifamily mortgage borrowing and lending for 2024. The total volume is expected to reach $539 billion by the end of the year, marking a 26% rise from 2023′s total of $429 billion.

Multifamily lending, which is included in the overall figures, is projected to grow to $297 billion this year, up 21% from last year’s $246 billion. Looking ahead to 2025, the MBA anticipates total commercial real estate lending to climb to $665 billion, with multifamily lending accounting for $390 billion of that total.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, attributes this anticipated growth to a recent moderation in interest rates and a significant number of loans set to mature in the coming quarters.

Woodwell noted that these factors are likely to stimulate an increase in mortgage borrowing, which has been subdued over the past two years. However, he emphasized that the timing of this recovery will largely depend on how quickly property owners take advantage of the lower long-term interest rates compared to last year.

Woodwell further explained that commercial mortgage originations typically follow property prices. The uncertainty surrounding future interest rates has contributed to the current slowdown, with many investors delaying property sales or refinancing in hopes of securing lower rates.

With longer-term rates now reduced, Woodwell expects many investors to act. Additionally, those seeking shorter-term financing may find reassurance in indications from the Federal Reserve that it plans to reduce short-term rates soon.