Fed Survey: Loan Easing Trend Continues in Q4 2021

Banks continued to ease standards on commercial, mortgage and personal loan products amid mixed demand, according to the Federal Reserve’s senior loan officer opinion survey released today.

  • C&I. Banks reported easing standards and terms on C&I loans to firms of all sizes, with 14.5% on net reporting easing lending standards somewhat for large and middle-market firms and 9.4% easing somewhat for small firms. Forty-four percent of respondents said that more aggressive competition from banks or nonbank lenders was a “very important” factor in their decision to ease terms and standards. Demand for C&I loans from large and middle-market firms picked up, with a net 21.8% noting that it was moderately stronger, while for small firms, a net 9.3% said demand was moderately stronger.
  • CRE. Demand for loans secured by multifamily properties picked up in the fourth quarter, with a net 37.7% reporting stronger demand. A net 23% of banks also reported easing standards for these loans. Firms reported slightly stronger demand for construction, land development and nonfarm residential loans, with a net 13.2% reporting moderately stronger demand. Moderate net shares of banks eased standards for these loans—about 10% on net did so. Meanwhile, a net 14.5% reported easing standards for loans secured by nonfarm residential properties, and a net 11.6% of banks reported stronger demand.
  • Mortgages. Continuing with the trend of easing, banks also reported loosening standards for most residential real estate loans and home equity lines of credit, though standards for GSE-eligible and government mortgages remained basically unchanged. Banks reported weaker demand on net for mortgage loans over the fourth quarter, including GSE-eligible and government mortgages, for which a net 23.3% reported weaker demand.
  • Personal loans. Demand strengthened for credit card loans over the fourth quarter as standards also eased—19.6% on net reported moderately stronger demand. Meanwhile, a net 7.3% of banks reported weaker demand for auto loans, while for other loan types, demand remained mostly unchanged.