Commercial/Multifamily Borrowing Down 25% in the Fourth Quarter of 2023
February 12, 2024
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SAN DIEGO (February 12, 2024) – Commercial and multifamily mortgage loan originations were 25 percent lower in the fourth quarter of 2023 compared to a year earlier, and increased 13 percent from the third quarter of 2023, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released today at MBA’s 2024 Commercial/Multifamily Finance Convention and Expo .
“Borrowing and lending backed by commercial real estate remained subdued to close out 2023,” said Jamie Woodwell, MBA’s Head of Commercial Real Estate Research. “The fourth quarter saw a small pick-up from the previous quarter, as is usually the case, but was still down about 25 percent from 2022’s already suppressed fourth-quarter pace. For the year, mortgage originations were about 50 percent below 2022 levels, with every major property type and capital source experiencing a decline.”
ORIGINATIONS DECREASE 25 PERCENT IN THE FOURTH QUARTER OF 2023
Decreases in originations for office, heath care, multifamily, and industrial properties led the overall drop in commercial lending volumes when compared to the fourth quarter of 2022. There was a 68 percent year-over-year decrease in the dollar volume of loans for office properties, a 39 percent decrease for health care properties, a 27 percent decrease for multifamily properties, and a 7 percent decrease for industrial properties. Retail properties increased 50 percent, and hotel property loan originations increased 81 percent, respectively, compared to the fourth quarter of 2022.
Among investor types, the dollar volume of loans originated for depositories decreased by 53 percent year-over-year. There was a 29 percent decrease for government sponsored enterprises (GSEs – Fannie Mae and Freddie Mac) loans, a 6 percent decrease in life insurance company loans, and a one percent decrease for investor-driven lender loans. There was a 144 percent increase in the dollar volume of commercial mortgage-backed securities (CMBS) loans.
FOURTH-QUARTER ORIGINATIONS UP 13 PERCENT FROM THE THIRD QUARTER OF 2023
On a quarterly basis, fourth-quarter originations for hotel properties increased 131 percent compared to the third quarter 2023. There was a 91 percent increase in originations for retail properties, a 72 percent increase for health care properties, and a 13 percent increase for multifamily properties. Originations for industrial properties decreased 11 percent, and originations for office properties decreased 32 percent.
Among investor types, between the third and fourth quarters of 2023, the dollar volume of loans for CMBS increased 68 percent, loans for investor-driven lenders increased 35 percent, originations for depositories increased 17 percent, and loans for GSEs increased one percent. The dollar volume of loans for life insurance companies decreased by 7 percent.
PRELIMINARY 2023 ORIGINATIONS 47 PERCENT LOWER THAN 2022
A preliminary measure of commercial mortgage bankers’ originations volumes shows activity in 2023 was 47 percent lower than in 2022. By property type, mortgage bankers originations for health care properties decreased 67 percent from 2022, office properties decreased 65 percent, industrial properties decreased 49 percent, multifamily properties decreased 46 percent, retail properties decreased 27 percent, and hotel properties decreased 10 percent.
Among investor types, for 2023 compared to 2022, mortgage bankers originations for depositories decreased 64 percent, originations for investor-driven lenders decreased 51 percent, loans for life insurance companies decreased 39 percent, loans for GSEs decreased 21 percent, and CMBS loans decreased 21 percent.
In late March, MBA will release its Annual Origination Summation report for 2023 with final origination figures for the year.