Total borrowing and lending for commercial and multifamily mortgages is expected to finish at $539 billion by the end of 2024, according to an updated baseline forecast by the Mortgage Bankers Association (MBA). This gives 2024 a 26% year-over-year increase from 2023’s total of $429 billion.
Multifamily lending accounts for the largest chunk of that total, with an expected year-end total of $297 billion, a 21% increase from 2023’s estimated $246 billion. Borrowing and lending next year will increase to $665 billion in total commercial real estate lending, the MBA anticipates, with $390 billion of that total in multifamily lending.
“The recent moderation in interest rates, coupled with the large volume of loans maturing in coming quarters, should prompt an uptick in mortgage borrowing from the low levels we’ve seen over the last two years,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “The exact timing of the bounce-back will depend on how quickly property owners jump on long-term interest rates that are down significantly from where they were a year ago.”
Trends in the Commercial Space
According to Commercial Edge, a number of trends have emerged in the commercial space:
- Nationwide, 379 million square feet of industrial space was under construction, a significant drop from year-ago levels of nearly 595 million square feet.
- Industrial transactions totaled $30.7 billion through the first seven months of the year at an average of $135 per square foot.
- Kansas City’s industrial pipeline grew from 7.8 million square feet one year ago to 11.8 million square feet underway in July.
“Commercial mortgage originations have historically followed property prices, and the uncertainty about the future path of interest rates has been a contributing factor to the current slowdown, with many investors holding off selling or refinancing a property in the hope of lower rates,” added Woodwell. “With longer term rates now lower, many of those players are likely to take action. Investors looking to shorter-term financing can also take solace in signs from the Federal Reserve that they will soon begin bringing down the short end of the curve.”
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