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Commercial real estate mortgage borrowing and lending totaled $816 billion last year, an 8% drop from 2021’s record $891 billion but a 33% increase from 2020’s $614 billion, according to the Mortgage Bankers Association’s (MBA’s) 2022 Commercial Real Estate/Multifamily Finance Annual Origination Volume summation.

The MBA also noted that, excluding activity from smaller and midsized depositories not directly captured in its survey, commercial and multifamily mortgage bankers closed $595 billion of loans last year, down 13% from the $683.2 billion reported in 2021.

“Borrowing and lending backed by commercial and multifamily properties started 2022 strong but then dropped off because of rising interest rates, uncertainty about property values, and increased questions about the economy and some property fundamentals,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Despite the 8% annual decline, the $816 billion in total volume was still second highest on record. Bank lending ran against the trend, increasing by 12% to $409 billion.”

Multifamily properties had the highest volume last year, with $437 billion of total lending and $333 billion of mortgage bankers’ originations. According to the MBA, first liens accounted for 93% of the dollar volume closed for mortgage bankers.

Depositories were the leading capital source for 2022, accounting for $408 billion of commercial and multifamily lending and $189 billion of mortgage bankers’ originations. Government-sponsored enterprises Fannie Mae and Freddie Mac saw the second-highest volume at $128 billion, followed by life insurance company and pension funds, private label commercial mortgage-backed securities, and investor-driven lenders.”

“A key question for 2023 is when the market will have stabilized enough for the logjam in new deal activity to break,” added Woodwell.