SAN DIEGO (February 12, 2024) – Commercial and multifamily mortgage loan originations declined 25% year over year in the fourth quarter of 2023 and increased 13% from the third quarter of 2023, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial and Multifamily Mortgage Bankers released today at the 2024 Commercial & Multifamily Finance Convention & Expo.
“Borrowing and lending secured by commercial real estate remained weak to close out 2023,” said Jamie Woodwell, MBA's head of commercial real estate research. “The fourth quarter saw a slight recovery from the previous quarter, as is customary, but was still about 25% down from the already sluggish pace in the fourth quarter of 2022. For the year, mortgage originations were about 50% below 2022 levels, with declines across all major property types and funding sources.”
Loan volume to fall 25% in Q4 2023
Lower loan volumes in office, healthcare, multifamily, and industrial properties led to an overall decline in commercial loan volume when compared to Q4 2022. Office loan volume was down 68% year over year, healthcare down 39%, multifamily down 27%, and industrial down 7%. Retail loan volume was up 50% and hotel loan volume was up 81% when compared to Q4 2022.
By investor type, dollar value of loans to depository institutions decreased 53% year over year. Loans to government-sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) decreased 29%, loans to life insurance companies decreased 6%, and loans to investor-sponsored lenders decreased 1%. Dollar value of loans to commercial mortgage-backed securities (CMBS) increased 144%.
Loan volume in Q4 up 13 percent from Q3 2023
On a quarterly basis, hotel loans increased 131% in the fourth quarter compared to the third quarter of 2023. Retail loans increased 91%, healthcare loans increased 72%, multifamily loans increased 13%, industrial loans decreased 11%, and office loans decreased 32%.
By investor type, from the third quarter to the fourth quarter of 2023, CMBS loans increased 68%, investor-led lenders loans increased 35%, depository institutions loans increased 17%, GSE loans increased 1%, and life insurance company loans decreased 7%.
Loan volume in 2023 will be 47 percent lower than in 2022
A preliminary measure of commercial mortgage bank lending volume shows activity in 2023 down 47 percent from 2022. By property type, mortgage bank lending for healthcare properties was down 67 percent from 2022, office properties were down 65 percent, industrial properties were down 49 percent, multifamily properties were down 46 percent, retail properties were down 27 percent and hotel properties were down 10 percent.
By investor type, in 2023 compared to 2022, mortgage bank lending to depository institutions decreased 64%, lending to investor-driven lenders decreased 51%, lending to life insurance companies decreased 39%, lending to GSEs decreased 21%, and CMBS lending decreased 21%.
In late March, the MBA will release its 2023 annual origination summary report, which will provide final origination figures for the year.