Fed: Business Credit Cheaper; Jumbo Mortgages Easier to Get

Credit standards continued to ease in most commercial and consumer loan categories, according to the Federal Reserve’s latest survey of senior loan officers released today. Banks reported significant easing of terms and costs of credit for commercial and industrial loans, as well as easing standards across a broad range of mortgage products.

A net 21.4 percent said the cost of credit for larger businesses had eased, and 18.8 percent said cost of credit had fallen for small business borrowers. Loan rate spreads for C&I loans narrowed across the board; a net 42.8 percent said spreads narrowed on loans to larger firms, while 36.2 percent said spreads narrowed on loans to smaller borrowers. Most respondents attributed the easing standards to robust competition and moderately stronger demand.

Fewer loan officers reported easing on commercial real estate loans, with around 20 percent saying demand was up in different CRE loan categories. Among consumer loans, lenders left standards little changed on net for auto loans and credit cards, even as demand for both grew.

Large shares of loan officers saw easing on jumbo home loans, with 23 percent reporting easing on jumbo Qualified Mortgages and 11.6 percent easing on jumbo non-QM loans. A net 11.3 percent said they eased standards for GSE-eligible home loans. Standards were eased across all mortgage categories except for subprime loans. Demand was stronger across most categories, with growing demand outpacing eased standards for government-insured mortgages.