The Mortgage Bankers Association has forecast this year’s lending volume will exceed $1 trillion, its highest level in history. The real estate finance association made this announcement in the opening days of its 2022 Commercial/Multifamily Finance Convention and Expo in San Diego.

Even though this milestone is significant, it isn’t particularly surprising — especially given the strength of certain asset classes and low interest rates encouraging investment and refinancing. And while that $1 trillion figure is impressive, it would amount to growth falling a bit short of last year’s: 13% compared to the more than 20% realized in 2021.

Where’s Multifamily Moving?

Multifamily originations are set to lead the way. MBA anticipates financing in the sector to reach $493 billion, nearly half of all lending volume. This would mark a 5% gain over last year’s estimated $470 billion. In its January 2022 outlook, Fannie Mae® put forth a slightly more conservative figure of $475 billion for the year, though it posited a stronger overall growth rate from its 2021 figure of $450 billion.

What’s one of the largest variables this year for lending? Interest rates hikes. The Federal Reserve is widely expected to announce a series of increases, building off pressure from high inflation. Many of the largest lenders are anticipating five, possibly even six, rate increases this year, speculating that overall rates could see a jump of, at a minimum, 125 basis points through the year, according to a mid-February Reuters report.

This could lead to a short-term lending “binge” as borrowers attempt to rapidly close advantageous fixed-rate financing prior to expected rate increases. It’s perhaps even more likely to pull investors off the sidelines to inject capital while it’s still relatively cheap to do so.

Although apartment prices have risen substantially in the past couple of years, there’s little evidence that this will put commercial real estate investors off making their next acquisition. Despite looming interest rate upticks, WMRE (formerly NREI) reports that high liquidity and steady increases in per-unit property values are likely to keep multifamily investment activity strong, citing data from Real Capital Analytics. Also promoting this growth are Freddie Mac® and Fannie Mae’s multifamily purchase volume caps, now set at an increased $78 billion.