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U.S. Economy Faces $117B Mortgage Debt in 2024, Owners Struggle to Refinance

The U.S. economy is expected to have $117 billion in mortgage debt due in 2024.

Posted on January 2, 2024

The U.S. is facing more than $100 billion in mortgage debt in 2024 as loans on vacant office buildings and a higher defaulting rate could hurt the economy.

About $117 billion is expected to be due this year, according to the Mortgage Bankers Association.

A large majority of these come from office buildings, which experienced a large drop in revenue since businesses have adopted more work-from-home or hybrid work routines. Moody’s Analytics found that 224 out of the 605 loans set to expire will be a challenge as the owners either owe too much in debt or the building isn’t making them enough money.

The bi-state area likely won’t be hit the hardest compared to other large cities in the country. Cities with the largest commercial mortgage debt include Manhattan, NY; San Francisco, CA; Chicago, IL; Los Angeles, CA; Houston, TX; Long Island City, NY; Sunnyvale, CA; Burbank, CA; Philadelphia, PA and Santa Clara, CA.

A large chunk of the office space owners took out their loans when interest rates were half what they are now. Interest rates were at 5.5 percent to counterbalance the rise in inflation. Now that prices are entering a cooling period, commercial real-estate analysts estimate it could bleed over into their market as well.

“It’s going to be a problem to get some of these refinancings done,” said John Duncan, who heads the real estate finance practice at law firm Polsinelli. “We’re seeing deals where even sophisticated borrowers are calling it a day and asking their lenders whether they would like to take the keys.”