Driven by High Rates, U.S. Commercial Lending Imploded 47 Percent in 2023

Driven by High Rates, U.S. Commercial Lending Imploded 47 Percent in 2023

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In 2023, total commercial real estate mortgage borrowing and lending was estimated at $429 billion, marking a 47 percent decline from $816 billion in 2022, and a 52 percent fall from the record high of $891 billion in 2021. These figures are highlighted in the Mortgage Bankers Association’s 2023 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation.

The MBA survey, which does not include data from smaller and mid-sized depositories, recorded $306 billion in loans closed by dedicated commercial mortgage bankers in 2023, a 49 percent decrease from $595 billion in 2022.

Jamie Woodwell

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, commented, “Higher interest rates, uncertainty about property values, and concerns over the fundamentals of some properties contributed to a sharp decline in CRE borrowing and lending last year. The reduction was widespread across all major property types and capital sources. The continued increase in the total CRE mortgage debt indicates that the drop in originations mainly reflected a lower borrower demand, influenced by fewer sales transactions and refinances. Where possible, property owners opted to hold steady.”

Woodwell also noted, “2024 seems to be starting slowly as well. High interest rates will likely remain a hindrance for many property owners, but with over $900 billion in loan maturities expected, and possibly a growing acceptance of these rates, we might see more activity in the market this year.”

Regarding specific property types, multifamily properties experienced the highest lending volume in the previous year, with an estimated total of $264 billion, and $178 billion of that directly tracked by dedicated mortgage bankers. First liens made up 96 percent of the dollar volume closed by mortgage bankers.

Mortgage banking firms reported closing $306 billion of CRE loans in their names and acting as intermediaries on another $225 billion. These firms also served as investment sales brokers for transactions worth $225 billion.

Depositories emerged as the top capital source for CRE mortgage debt, followed by life insurance companies, pension funds, government-sponsored enterprises (Ginnie Mae, Fannie Mae, and Freddie Mac), private label CMBS, and investor-driven lenders.

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About Caroline Vega 228 Articles
Caroline Vega combines over a decade of digital strategy expertise with a deep passion for journalism, originating from her academic roots at Louisiana State University. As an editor based in New Orleans, she directs the editorial narrative at Commercial Lending News, where she crafts compelling content on commercial lending. Her unique approach weaves her background in finance and digital marketing into stories that not only inform but also drive industry conversations forward.