According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, commercial and multifamily mortgage loan originations were 25% lower in Q4 of 2023 compared to a year earlier, and increased 13% from Q3 of 2023.
“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% from 2022’s already suppressed fourth-quarter pace. For the year, mortgage originations were about 50% below 2022 levels, with every major property type and capital source experiencing a decline.”
Decreases in originations for office, heathcare, multifamily, and industrial properties led the overall drop in commercial lending volumes when compared to Q4 of 2022. There was a 68% year-over-year decrease in the dollar volume of loans for office properties, a 39% decrease for healthcare properties, a 27% decrease for multifamily properties, and a 7% decrease for industrial properties. Retail properties increased 50%, and hotel property loan originations increased 81%, respectively, compared to Q4 of 2022.
Among investor types, the dollar volume of loans originated for depositories decreased by 53% year-over-year. There was a 29% decrease for government sponsored enterprises (GSEs–Fannie Mae and Freddie Mac) loans, a 6% decrease in life insurance company loans, and a 1% decrease for investor-driven lender loans. There was a 144% increase in the dollar volume of commercial mortgage-backed securities (CMBS) loans.
On a quarterly basis, fourth-quarter originations for hotel properties increased 131% compared to Q3 2023. There was a 91% increase in originations for retail properties, a 72% increase for healthcare properties, and a 13% increase for multifamily properties. Originations for industrial properties decreased 11%, and originations for office properties decreased 32%.
Among investor types, between the third and fourth quarters of 2023, the dollar volume of loans for CMBS increased 68%, loans for investor-driven lenders increased 35%, originations for depositories increased 17%, and loans for GSEs increased 1%. The dollar volume of loans for life insurance companies decreased by 7%.
A preliminary measure of commercial mortgage bankers’ originations volumes shows activity in 2023 was 47% lower than in 2022. By property type, mortgage bankers’ originations for healthcare properties decreased 67% from 2022, office properties decreased 65%, industrial properties decreased 49%, multifamily properties decreased 46%, retail properties decreased 27%, and hotel properties decreased 10%.
Among investor types, for 2023 compared to 2022, mortgage bankers’ originations for depositories decreased 64%, originations for investor-driven lenders decreased 51%, loans for life insurance companies decreased 39%, loans for GSEs decreased 21%, and CMBS loans decreased 21%.
