While banks continued to remain in a posture of easing standards on commercial, mortgage and personal loan products, the easing trend slowed in the third quarter from the prior two quarters, according to the Federal Reserve’s senior loan officer opinion survey released today.
- C&I. Fewer banks eased standards for commercial and industrial loans in the third quarter, with 18% on net easing for large and middle-market firms and 11% easing for small firms. Banks easing standards and terms were most likely to cite more aggressive competition as the reason. Banks offered mixed reports on demand, with 8% on net reporting stronger demand from large and midsize firms and no change on net reported in small firms’ demand. Among banks seeing stronger demand, the most important factors were client M&A financing needs. Banks reporting weaker demand cited growth in customers’ internally generated funds.
- CRE. The commercial real estate market cooled somewhat in the third quarter, with just 3% on net reporting stronger demand for construction and land development loans (down from 21% in Q2) and 21% on net reporting stronger multifamily loan demand (down from 37% in Q2). Nearly three-quarters of banks kept standards unchanged for construction and land development loans for multifamily CRE loans.
- Mortgages. Almost all banks kept standards unchanged for conforming and government mortgage loans in the third quarter. However, with housing prices remaining elevated in Q3, 28% of banks eased standards for Qualified Mortgage-designated jumbo loans, a quarter eased standards on non-QM jumbos and one in five eased on non-jumbo, non-conforming QMs. Demand for jumbo loans cooled.
- Personal loans. The trend in easing standards for consumer credit continued but tapered slightly amid easing demand, with 31% of banks on net easing standards on credit card loans, 9% on net easing standards on auto loans and 16% on net reporting eased standards on other consumer loan types. On net, 16% of banks saw increased demand for credit cards and 25% saw stronger demand for auto credit.
