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WASHINGTON, DC (November 7, 2023) — Commercial and multifamily mortgage lending was down 49% year over year in the third quarter of 2023 and down 7% from the second quarter of 2023, according to the Mortgage Bankers Association’s (MBA) quarterly Commercial and Multifamily Mortgage Lending Survey.
“Borrowing secured by commercial real estate declined again in the third quarter,” said Jamie Woodwell, head of commercial real estate research at the MBA. “Borrowing and lending were down across all property types and funding sources compared to a year ago. However, compared to the second quarter of the year, transaction volumes were more stable, with some sectors, such as industrial property and life insurance company lenders, seeing increased transaction volumes.”
Woodwell added, “CRE mortgage originations are down 44 percent so far this year due to questions about the fundamentals of some properties, uncertainty about property values, and rising and volatile interest rates. Greater certainty around these conditions is a key prerequisite to breaking the slump in transaction activity.”
Loan volume to fall 49% in Q3 2023
Decreases in loan volume across all major property types led to lower total commercial/multifamily loan volumes compared to Q3 2022. Healthcare loan volume was down 76% year over year, hotels down 52%, retail down 51%, multifamily down 50%, office loans down 49% and industrial down 35%.
By investor type, dollar volume of loans to depository institutions was down 73% year over year, investor-sponsored lenders were down 55%, government-sponsored enterprise (GSE – Fannie Mae and Freddie Mac) loans were down 27%, commercial mortgage-backed securities (CMBS) were down 5%, and life insurance company loans were down 4%.
Loan volume in Q3 2023 will be 7 percent lower than in Q2 2023
On a quarterly basis, healthcare loan volume was down 28% in the third quarter compared to the second quarter of 2023. Retail loan volume was down 20% and multifamily loan volume was down 16%. Hotel loan volume increased 2%, office loan volume increased 4% and industrial loan volume increased 36%.
By investor type, CMBS loans fell 21%, depository institution loans fell 19%, investor-driven lenders loans fell 13%, and GSE loans fell 4% from the second to third quarter of 2023. Life insurance company loans increased 18%.