Fed Survey: CRE Lending Tightened in Second Quarter

Bankers continued tightening credit for commercial real estate and certain consumer loans in the second quarter of 2017, while residential mortgage lending eased and commercial and industrial standards remained mostly unchanged, according to the Federal Reserve’s latest senior loan officer opinion survey released today.

Regarding CRE lending, 17.3 percent said they tightened standards somewhat on construction and land development loans, while 21 percent said they tightened somewhat or considerably on multifamily loans. Twelve percent said they tightened standards somewhat for loans secured by nonfarm nonresidential properties. Lenders noted slightly weaker demand for construction and land development loans and loans secured by multifamily residential properties during the second quarter, and demand for nonfarm residential loans remained unchanged on net.

Commercial and industrial lending standards remained mostly unchanged, though some lenders reported some easing of specific loan terms. Of those, 86.7 percent said that more aggressive competition from bank or nonbank lenders was a somewhat or very important factor in the decision to ease. Demand for C&I loans was weaker in the second quarter, with lenders citing shifts in customer borrowing to other bank or nonbank sources and decreases in customers’ needs to finance inventory, accounts receivable, investment in plants or equipment and mergers and acquisitions.

Meanwhile, on the residential lending side, lenders saw stronger demand for most categories of residential loans, with most saying that their standards either eased or remained unchanged. Auto lending and credit card standards tightened amidst weaker demand in the second quarter.