Banks reported stronger demand for commercial and industrial loans to large and middle-market firms in the fourth quarter of 2024, while demand for C&I loans to small firms remained basically unchanged, according to the Federal Reserve’s latest senior loan officer opinion survey. Banks also reported tighter lending standards for C&A loans to firms of all sizes.
Banks generally reported tighter standards and basically unchanged demand for commercial real estate loans, according to the Fed. For loans to households, banks reported, on balance, basically unchanged lending standards and weaker demand across most categories of residential real estate loans.
The most recent survey also included questions about banks’ expectations for changes in lending standards, borrower demand, and loan performance over 2025. Banks reported expecting lending standards to either ease or remain basically unchanged and demand to strengthen across all loan categories. In addition, banks generally reported expecting loan quality to improve for loans to businesses but to either deteriorate or remain basically unchanged for most consumer loan types.
C&I: Modest (5%-10%) and moderate (10%20%) net shares of banks reported having tightened standards on C&I loans to large and middle-market firms and to small firms, respectively. Moderate and modest net shares of banks reported charging higher premiums on riskier loans to large and middle-market firms and to small firms, respectively, while modest net shares of banks reported more frequent use of interest rate floors and tighter collateralization requirements to firms of all sizes.
CRE: Over Q4, modest net shares of banks reported having tightened standards for construction and land development loans as well as loans secured by nonfarm nonresidential properties, while standards for loans secured by multifamily properties remained basically unchanged on net. These responses were similar across large and other banks.
Mortgages: Banks reported having left standards basically unchanged over Q4 for most RRE loan types, on balance, except for subprime and non-qualified mortgage jumbo mortgages, for which modest net shares of banks reported having tightened standards. Similarly, banks reported that standards for HELOCs remained basically unchanged.
Personal lending: A modest net share of banks reported having tightened standards on credit card loans, while standards were basically unchanged for auto and other consumer loans on balance. Banks reported having tightened most queried terms on credit card loans, with a moderate net share of banks increasing minimum credit score requirements and modest net shares tightening credit limits and lowering the extent to which loans are granted to customers that do not meet credit-scoring thresholds.
