While the Mortgage Bankers Association (MBA) projects commercial and multifamily lending to increase this year compared with 2024, it notes that it won’t be all smooth sailing.
Commercial and multifamily lending is expected to increase to $583 billion this year, a 16% bump from last year’s estimated total of $503 billion, according to the MBA at its 2025 Commercial/Multifamily Finance Convention and Expo. Multifamily lending on its own also is projected to increase by 16% from last year’s estimate of $312 billion to $361 billion in 2025.
According to the MBA, originations will jump even more in 2026. It forecasts an estimated $709 billion in total commercial real estate lending, including $419 billion for multifamily.
“There are still plenty of challenges in commercial real estate, but there are also signs of stabilization. Given the strong pickup in origination activity at the end of 2024, it appears that at least some borrowers and lenders are ready to move,” said senior vice president and chief economist Mike Fratantoni. “MBA is forecasting that interest rates are going to stay within a trading range for the next few years. With abundant capital ready to be deployed, and if rates decline as they did at the end of 2024, we fully expect that borrowers and lenders will jump on any opportunities.”
The fourth quarter saw commercial and multifamily mortgage lending providing “a welcome rebound for the industry,” said Fratantoni. Loan originations were 84% higher than the prior year and 30% higher than the third quarter. The dollar volume of loans for multifamily properties saw a 69% increase year over year and a 22% increase quarter over quarter.
“The significant, but brief, dip in interest rates in September, followed by a pickup in market sentiment post-election, resulted in more business, with origination activity back to 2022 levels,” the chief economist said. “The triple-digit percentage increases in the origination indexes certainly reflect the bounce off a low base. With interest rates moving up again to start 2025, we will have to see how origination activity responds through the first quarter.”
Fratantoni noted several factors will continue to cause volatility in rates, with MBA projecting somewhat slower economic growth and a marginally weaker job market in the years ahead.
“Given our forecast for interest rates and the broader economy, MBA is forecasting growth in commercial mortgage originations for the next two years,” he added. “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.”
The MBA forecasts 20%, or $957 billion, of $4.8 trillion of outstanding commercial mortgages held by lenders and investors will mature this year—this marks a 3% increase from the $929 billion that matured last year.
The loan maturities vary significantly by investor and property type groups. For multifamily, 14% of loans backed by these assets, not including those serviced by depositories, will mature in 2025. In addition, 35% of hotel and motel loans, 24% of office property loans, and 22% of industrial property loans as well as 18% of those backed by retail and health care properties will come due this year.
Only 3%, or $31 billion, of the outstanding balance of multifamily and health care mortgages held or guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration, and Ginnie Mae will mature this year.
“While the Federal Reserve cut its short-term interest rate by 100 basis points in 2024, longer-term interest rates increased over the same time by an equivalent amount. Commercial property owners who had sought to take advantage of a drop in rates stemming from Fed cuts were disappointed,” said Fratantoni. “As a result, many loans that might have matured in 2024 have been extended into 2025, with the aggregate results showing a 3% increase in total commercial mortgages maturing in 2025 compared to what MBA had estimated would mature last year.”
He added the path to work through the maturities will remain challenging and opportunities will vary across capital sources, property types, and geographic markets.
