WASHINGTON–The Fed’s April 2024 Senior Loan Officer Opinion Survey on Bank Lending Practices shows lenders continue to adjust underwriting standards, more so on commercial loans than consumer loans.
With loans to businesses, survey respondents reported, on balance, tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over the first quarter. Meanwhile, banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories, the Fed survey found.
“For all CRE loan categories, banks reported having tightened all queried lending policies, including the spread of loan rates over the cost of funds, maximum loan sizes, loan-to-value ratios, debt service coverage ratios, and interest-only payment periods,” the Fed said in releasing its analysis.
Consumer Loan Findings
Meanwhile, on consumer loans, banks reported that lending standards tightened across some categories of residential real estate (RRE) loans, while remaining unchanged for others on balance.
“Demand weakened for all RRE loan categories. In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Moreover, for credit card, auto, and other consumer loans, standards reportedly tightened and demand weakened,” the report found. “While banks, on balance, reported having tightened lending standards further for most loan categories in the first quarter, lower net shares of banks reported tightening lending standards than in the fourth quarter of last year across most loan categories.”
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