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April 19, 2022

Multifamily Lending to Drop This Year Amid Rising Rates

After seeing considerable growth in borrowing and lending in the commercial and multifamily sectors in 2021, the Mortgage Bankers Association tells the industry not to expect a repeat performance this year.

“Holding steady” is forecast for commercial mortgage borrowing and lending, with multifamily lending alone expected to decline 11 percent from last year’s estimated record of $470 billion.

Jamie Woodwell, MBA’s vice president for commercial real estate research, explained that the interest rate and economic outlook has shifted since MBA’s updated its commercial real estate finance forecast in February.

“The rapid rise in interest rates is expected to take some wind out of the sails of new lending activity, but healthy property fundamentals and strong property values should support the markets and keep commercial real estate mortgage demand at strong levels,” Woodwell said in prepared remarks.

In this environment commercial and multifamily investors will have to navigate an interplay of borrowing costs, cap rates, market rents and expenses, says Doug McKnight, president & CIO at RREAF Holdings. One solution is to lock in fixed-rate debt even if it is more expensive in the short term, he tells

“We believe holding rental real estate with fixed debt through an entire inflation cycle will be more lucrative, as opposed to variable-rate debt, which presents uncertainties when matching up against the other components of an asset’s capital stack and certain market dynamics that can impact overall performance and investor returns,” McKnight said.

MBA does anticipate borrowing and lending to grow in 2023.