CRE Lending Standards Remain Tight, Demand Unchanged: Fed Survey 

The Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) for the fourth quarter showed minimal change from the previous quarter. Respondents once again reported “tighter lending standards for commercial and industrial (C&I) loans to firms of all sizes.” 

Meanwhile, banks reported stronger demand for C&I loans to large and middle-market firms, while demand for C&I loans to small firms remained largely unchanged. Additionally, banks noted tighter lending standards for commercial real estate (CRE) loans, with demand for CRE loans staying essentially the same. 

For loans to households, banks reported “basically unchanged lending standards” and weaker demand across most categories of residential real estate (RRE) loans. 

Additionally, banks reported tighter standards for credit card loans, while lending standards for auto and other consumer loans remained unchanged. Demand weakened for credit card and other consumer loans but stayed the same for auto loans. Lastly, banks noted unchanged lending standards and demand for home equity lines of credit (HELOCs). 

In the January SLOOS, a set of special questions was included to assess banks’ expectations for changes in lending standards, borrower demand, and loan performance for the year. Banks reported anticipating that lending standards would either ease or remain unchanged, with demand expected to strengthen across all loan categories. Additionally, banks generally expected loan quality to improve for loans to businesses, but they expected it to either deteriorate or remain unchanged for most consumer loan types.