During the third quarter, banks reported that lending standards for commercial and industrial loans to large and middle-market firms were basically unchanged, while standards tightened for C&I loans to small firms, according to the Federal Reserve’s latest senior loan officer opinion survey. Banks also reported tighter standards and weaker demand for all commercial real estate loans.
For loans to households, banks reported having left standards basically unchanged for most types of residential mortgage loans except qualified mortgage (QM) jumbo and non-QM jumbo mortgages, for which banks reported having eased standards. In contrast, banks reported tightening standards for subprime mortgages. Standards for home equity lines of credit (HELOCs) were also basically unchanged on net. Meanwhile, banks reported weaker demand across all residential real estate loan categories and unchanged demand for HELOCs.
The most recent survey also included special questions on credit card loans and lending to non-depository financial institutions, or NDFIs. Banks reported being more likely to approve credit card applications to super-prime and prime borrowers and less likely to approve applications to subprime borrowers, with small banks driving the trend for subprime borrowers. Banks also reported having tightened standards for all queried types of loans to NDFIs — including loans to mortgage credit intermediaries, business credit intermediaries, private equity funds, consumer credit intermediaries, and other NDFIs — over the past quarter.
