Originations climbed as rate stability drew depositories back into the market
Commercial and multifamily mortgage lending ended 2025 on a markedly stronger footing, with originations surging even as performance diverged sharply by property type and capital source.
Updated figures from the Mortgage Bankers Association (MBA) showed commercial and multifamily mortgage originations were 30% higher in the fourth quarter of 2025 than a year earlier and 25% above the prior quarter, capping a year in which total 2025 volumes were an estimated 40% higher than 2024.
Office, multifamily, industrial and health care properties led the gains, while retail and hotel loans lagged.
“The 30% increase in originations during the final three months of 2025 capped a much stronger year for commercial and multifamily mortgage lending, as activity for depositories increased sharply in the fourth quarter and for 2025 as a whole,” said Reggie Booker, MBA’s associate vice president of commercial and multifamily research.
“Higher origination volumes in the fourth quarter point to improving conditions in commercial mortgage markets, though activity remains uneven across property types.”
By property type, office originations by dollar volume were 95% higher than a year earlier, industrial was up 23%, multifamily 22% and health care 20%, according to MBA.
Retail loans fell 12% year over year and hotel originations dropped 34%, underscoring ongoing caution around consumer-facing and travel‑dependent assets.
“2025 represented a strong rebound from 2024, as lending volumes increased across most investor categories amid greater rate stability and clearer pricing expectations,” Booker said.
Banks led the comeback
Banks and other depositories were the most aggressive lenders in late 2025. MBA data showed depository originations up 74% year over year in the fourth quarter, with investor‑driven lenders up 46%.
Commercial mortgage‑backed securities issuance rose 5%, while Fannie Mae and Freddie Mac volumes were 4% higher.
From the third to the fourth quarter, depositories increased production by 54%, with life insurers up 27%, investor‑driven lenders up 21% and CMBS up 6%. Government‑sponsored enterprise volumes were essentially flat.
The late‑year surge built on the momentum previously reported in the third quarter, when commercial and multifamily originations climbed 36% from a year earlier and 18% from the prior quarter.
“Commercial and multifamily borrowing has now increased for five straight quarters on both a quarterly and annual basis,” Booker said at the time.
“Lending activity increased last quarter across most major property types and capital sources, led by particularly strong growth in office, retail, and hotel properties. While some sectors, such as health care and industrial, saw slower activity, overall volumes reflected improving sentiment as property values stabilized and loans reaching maturity were refinanced.”
Outlook hinges on multifamily and rates
Despite soft spots in retail and lodging, MBA projections from January indicated the multifamily market grew by nearly 15% in 2025 to exceed $330 billion and is expected to expand another 20% in 2026 to around $400 billion, with Fannie Mae and Freddie Mac positioning themselves to support that growth.
Beyond 2026, MBA did not project another surge. Instead, it expects multifamily production to settle at roughly $390 billion in both 2027 and 2028, suggesting a more mature phase of the post‑pandemic recovery.
With rate volatility easing and banks back in force, the window for refinancing and selective acquisition financing has reopened, but underwriting still depends heavily on which side of that bifurcation a property sits.
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