The latest survey from the Federal Reserve reveals standards mostly unchanged
In the most recent Survey on Bank Lending Practices, senior loan officers report that banks tightened lending standards across all three major commercial real estate categories over the last three months, as well as credit card borrowing.
Respondents reported that banks left their standards basically unchanged for business loans, and eased some of the terms on commercial and industrial loans (C&I) to large and middle-market firms, while standards and most terms remained basically unchanged for such loans to small firms.
Meanwhile, banks reported weaker demand for C&I loans from firms of both size categories. There was also less demand in the commercial real estate categories of construction and land development loans, non-farm non-residential loans, and multi-family loans.
In terms of residential real estate, respondents claimed that there wasn’t a marked difference to lending standards, with the exception of non-QM jumbo residential mortgage loans, for which a small fraction of banks reportedly eased lending standards.
For most categories of closed-end RRE loans, including GSE-eligible and qualified mortgage jumbo mortgages, which make up the majority of bank mortgage originations, moderate net shares of banks reported weaker demand. Meanwhile, demand was basically unchanged for subprime residential mortgages. A significant fraction of banks, however, reported weaker demand for HELOCs.
Due to the apparent softening of economies in Europe and China, the Fed said, a moderate net fraction of banks reported that they expect the quality of loans to exposed firms to deteriorate.
The report also appeared to show some rising concerns over the economic outlook despite the many signs of a strong U.S. labor market and healthy economic growth.
Responses were received from 73 domestic banks and 21 U.S. branches and agencies of foreign banks.
