The Mortgage Bankers Association (MBA) recently released its 2022 commercial real estate finance outlook survey results, which reveal that while lending appetites are very high, there is a shift in expected growing funding sources.
The MBA predicts that total CRE lending for 2022 could surpass $1 trillion, with multifamily lending expected to reach $493 billion, topping 2021’s record total of $470 billion.
Industry Agreement on Growth
One hundred percent (100%) of those responding to MBA’s survey anticipates the market will grow in 2022. Seventy-six percent (76%) of survey respondents expect lenders’ appetite overall to be “very strong” and 48% of originators surveyed expect borrowers’ lending appetite to be “very strong” for taking new loans in 2022.
With that increased activity comes more demand for funding sources, and MBA members surveyed shared their thoughts on how the year’s lending totals would break out.
Forty-six percent (46%) believe growth in investor-driven origination volume, such as REITs and debt funds, in 2022 will be greater than 10% over the year prior. In total, 89% of respondents expect increased volume from that source this year.
Forty-two percent (42%) of respondents believe bank lending will be up between 5-10% over 2021, and 40% believe life/pension lending will be up between 5-10%. In comparison, while respondents believe all types of lending platforms will see a boost in 2022, only 4% of respondents expect that FHA lending will increase more than 10%, and 38% believe there will be no change in lending volume for FHA in 2022.
Thirteen percent (13%) of respondents expect no change in Fannie Mae and Freddie Mac volume in 2022, but all other respondents believe there will be increases of up to 5% change (33% of respondents), between 5 and 10% change (38% respondents), or greater than 10% increase over 2021 (17% of respondents).
What's Impacting Market Activity
In terms of the factors potentially having a negative impact on the markets this year, respondents note changes in inflation; long-term interest rates; legislative changes; work from home; short-term interest rates; changes in the severity of the pandemic; and regulatory changes.
Positive influences for CRE noted for this year are existing fundamentals for the industrial, apartment and retail markets; the broader economy; an increasing focus on ESG; and new construction activity.
MBA’s survey was conducted between December 1-15, 2021 with leaders at 70 of the top commercial and multifamily mortgage origination firms, as determined by MBA’s 2020 Annual Origination Rankings Report.
For more information about MBA’s research, click here.