Banks reported tightening their commercial real estate lending policies during the first quarter of 2024, according to the Federal Reserve’s senior loan officer opinion survey released Monday. The quarterly survey noted that banks reported tighter standards and weaker demand for all types of commercial and industrial loans during the first three months of the year. But for the most recent survey, the Fed asked banks “a set of special questions” about CRE lending in light of recent developments in the marketplace. Banks reported tighter standards for all CRE lending policies surveyed, including maximum loan sizes and interest-only payment periods. Banks were also asked about residential real estate, reporting that lending standards tightened across some categories of RRE while overall demand for loans was weaker.
C&I: Moderate net shares of banks (10%-20%) reported having tightened standards on C&I loans to firms of all sizes. Tightening was most widely reported for the maximum size of credit lines, the costs of credit lines, the spreads of loan rates over the cost of funds and the premiums charged on riskier loans.
CRE: Significant net shares of banks (50% or more) reported tightening standards for all types of CRE loans. Meanwhile, a moderate net share of banks reported weaker demand for construction and land development loans, while significant net shares of banks reported weaker demand for loans secured by nonfarm nonresidential and multifamily residential properties.
Mortgages: Modest net shares of banks (5%-10%) reported tightening standards for nonqualified mortgage jumbo, non-QM non-jumbo, subprime and QM non-jumbo non-government-sponsored enterprise-eligible mortgage loans. As for demand, significant net shares of banks reported weaker demand for subprime and non-QM mortgages, while moderate net shares of banks reported weaker demand for most other RRE loan categories. Similarly, a moderate net share of banks reported weaker demand for home equity lines of credit.
Personal lending: Banks reported tightening lending standards and most terms for all consumer loan categories. Significant net shares of banks reported tightening standards for credit card loans, while moderate and modest net shares of banks reported tightening standards for other consumer loans and auto loans, respectively. A significant net share of banks reported increasing minimum credit score requirements for credit card loans, while moderate net shares of banks reported doing so for auto loans and other consumer loans.
