In the previous quarter, banks kept terms and standards for business loans unchanged or eased them slightly, while tightening slightly on commercial real estate loans and easing in most residential mortgage loan categories, according to the Federal Reserve’s latest senior loan officer opinion survey released today. When looking at the past 13 years, lenders reported that standards for C&I loans tended to be easier than the midpoint for that period, while standards on mortgage and CRE loans were said to be tighter than the midpoint.
On net, 16 percent of banks — up from the period before — eased standards and terms for commercial and industrial loans to large and middle-market firms; just 7.5 percent banks on net said they eased for smaller firms. For large and midsize firms, banks that eased terms were more likely to allow bigger credit lines, relax interest rate spreads and cut the cost of credit lines. More than nine in 10 banks that eased cited more aggressive competition as an important reason; the few that did tighten standards cited the economic outlook or reduced risk tolerance. Demand for C&I loans increased; on net, 10 percent of banks reported getting more credit inquiries.
Meanwhile, fewer banks tightened on CRE loans than in the previous quarter; most banks kept standards unchanged for construction loans, while 7.3 percent reported tightening on multifamily loans. For residential mortgage loans, 15.3 percent reported easing on GSE-eligible mortgages; banks held standards unchanged or eased them on every mortgage loan type except for subprime. Mortgage demand slipped during the previous quarter. In the consumer lending category, a net 12 percent of banks tightened standards on credit cards, principally by lowering credit limits, increasing spreads and increasing the minimum required credit score, while a net 3.5 percent eased terms on auto loans.