C&I Lending Standards Tighten, Mortgage Standards Unchanged

Over the past three months, banks reported tightening lending standards for C&I and CRE loans, according to the July 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices. The survey results also indicated that demand for C&I loans was little changed during the second quarter of 2016, while demand for CRE loans had strengthened on net.

Although most bank standards remained unchanged, a net 8.5% of banks reported tightening standards for C&I lending to large and middle market firms, while a net 7.1% reported tightening lending standards for smaller firms. Most respondents who tightened standards reported a less favorable or more uncertain outlook, worsening of industry-specific problems and reduced tolerance for risk. In contrast, the banks who eased standards cited increased competition from nonbank lenders as a reason for doing so.

Regarding household loans, lending standards for all types of residential real estate mortgages were little changed on balance, with the exception of GSE eligible loans, for which a moderate net fraction of banks reported easing standards, and for subprime residential mortgages, for which a moderate net fraction of banks reported tightening standards.

Read the survey release.