Projection: Increase Expected in Commercial and Multifamily Lending
The commercial and multifamily lending market is projected to experience substantial growth in 2025, with an anticipated 16% increase in borrowing and lending activities compared to the previous year. The Mortgage Bankers Association (MBA) forecasts that total commercial and multifamily mortgage originations will reach $583 billion in 2025, a significant jump from the estimated $503 billion in 2024.
Multifamily lending, which is a part of the total figures, is also expected to see a 16% rise, reaching $361 billion in 2025 compared to $312 billion in the prior year. Looking forward to 2026, MBA predicts a total of $709 billion in commercial real estate lending, with $419 billion specifically allocated to multifamily loans.
While challenges persist in the commercial real estate sector, there are positive signs indicating increased stability and reinvigorated activity. According to Mike Fratantoni, Ph.D., MBA’s SVP and Chief Economist, “There are still plenty of challenges in commercial real estate, but there are also signs of stabilization.” He also emphasized the influence of interest rates on lending activity, forecasting that rates will fluctuate within a trading range in the coming years.
Despite the optimism surrounding lending growth, Fratantoni highlighted the fluid nature of market conditions, underscoring the significance of economic and employment trends. He noted, “Given our forecast for interest rates and the broader economy, MBA is forecasting growth in commercial mortgage originations in the next two years,” adding, “We expect an increase in originations across property types and capital sources, but certainly recognize the additional challenges posed by the large number of loans scheduled to mature in 2025.”
While economic growth may slow down and the labor market could experience some weakening, MBA anticipates that the availability of capital and borrower demand will sustain lending activities across various commercial real estate sectors. In the unfolding landscape of 2025, market participants will be closely monitoring interest rate movements, loan maturities, and evolving economic conditions to identify potential opportunities in the lending sphere.