Commercial real estate mortgage lending will drop by 15% in 2023 compared with the previous year, the Mortgage Bankers Association forecasts, falling to $684B. In 2022, the total was $804B.

The organization predicts that multifamily borrowing, which is included in the total figures, will drop to $384B in 2023 — a 16% decline from the 2022 total of $459B.

MBA’s forecast assumes economic weakness during the early months of 2023, along with moderation in interest rates. It also foresees an overall improvement in the U.S. economy toward the end of the year.

The organization forecasts that total mortgage volume will bounce back in 2024 to an estimated $906B.

"Given changes in interest rates and investment yields over the last year, new deals and loans are sizing differently than in previous years," MBA Head of Commercial Real Estate Research Jamie Woodwell said in a statement. "These new changes will take time for buyers and sellers to digest, and we expect the logjam to suppress volumes this year."

There are other challenges ahead for the CRE mortgage market, according to the MBA. At the organization's national conference in January, MBA Associate Vice President of Commercial and Multifamily Research Reggie Booker said 24% of all CRE loans are scheduled to mature in 2023 and 2024, Commercial Observer reported.

Of that total, about one-fifth of those loans are associated with office properties, an asset class whose future is uncertain considering the change in office usage that began with the pandemic.