During the fourth quarter of the year, banks reported tighter lending standards for commercial and industrial loans to firms of all sizes, with stronger demand for C&I loans to large and middle-market firms but unchanged demand for loans to small firms, according to the Federal Reserve’s senior loan officer opinion survey released today. Banks also reported generally unchanged standards and stronger demand for commercial real estate loans.
For loans to households, banks reported basically unchanged lending standards and weaker demand across most categories of residential real estate loans, according to the survey. In addition, standards reportedly eased for auto loans and remained basically unchanged for credit card and other consumer loans, while demand weakened for auto and other consumer loans but remained basically unchanged for credit card loans.
The survey also contained two sets of special questions on lending expectations for 2026. Banks expect lending standards generally to remain unchanged and demand to strengthen across all loan categories this year. Banks also reported being more likely to approve loans to firms benefiting from high AI exposure and less likely to approve loans to firms adversely affected by high AI exposure.
C&I: Over the fourth quarter, modest net shares of banks (5%-10%) reported having tightened standards on C&I loans to firms of all sizes. Meanwhile, moderate net shares of banks (10%-20%) reported lower costs of credit lines and narrower spreads on C&I loans to large and middle-market firms, and a modest net share of banks reported having tightened the maximum size of credit lines for small firms.
CRE: Over the fourth quarter, a modest net share of banks reported having eased standards for loans secured by multifamily properties, while standards for construction and land development loans and loans secured by nonfarm nonresidential properties remained basically unchanged on net. However, these responses differed across bank size categories, as large banks reported having eased and other banks reported having tightened standards for CRE loans on balance.
Mortgages: Banks reported having left standards basically unchanged over the fourth quarter for most RRE loan types. Meanwhile, banks reported weaker demand for RRE loans over the fourth quarter. Moderate net shares of banks reported weaker demand for GSE-eligible, non-qualified mortgage (non-QM) loans and subprime mortgages, while modest net shares of banks reported weaker demand for all other mortgage loan categories. In contrast, a modest net share of banks reported stronger demand for HELOCs.
Personal lending: A modest net share of banks reported having eased standards for auto loans, while standards were basically unchanged for credit card and other consumer loans. Banks generally reported that terms across all consumer loan categories remained unchanged, except for modest net shares of banks lowering the extent to which auto and other consumer loans are granted to customers who do not meet credit scoring thresholds. Regarding demand for consumer loans, significant (20%-50%) and moderate net shares of banks reported weaker demand for auto loans and other consumer loans, respectively, while demand for credit card loans remained basically unchanged over the fourth quarter.
