WASHINGTON–The July 2021 Senior Loan Officer Opinion Survey on Bank Lending Practices released by the Fed has found that when it comes to loans to businesses, on balance respondents reported easier standards and stronger demand for commercial and industrial (C&I) loans to firms of all sizes over the second quarter.
For commercial real estate (CRE), standards on multifamily and construction and land development loans eased, while standards on loans secured by nonfarm nonresidential properties remained basically unchanged. Banks reported stronger demand for all CRE loan categories, according to the survey.
“For loans to households, banks eased standards across most categories of residential real estate (RRE) loans, on net, and reported stronger demand for most types of RRE loans over the second quarter,” the Fed survey states. “Banks also eased standards and reported stronger demand across all three consumer loan categories—credit card loans, auto loans, and other consumer loans.”
‘Easier End of Spectrum’
The most recent survey included an additional set of special questions inquiring about the current level of lending standards relative to the midpoint of the range over which banks’ standards have varied since 2005.
“Banks, on balance, reported that their lending standards on C&I loans are currently at the easier end of the range of standards between 2005 and the present,” the Fed reported. “For subprime consumer loans and most categories of commercial or residential mortgages, banks reported currently having relatively tighter levels of lending standards on net. However, the reported levels of lending standards eased for all loan categories relative to the July 2020 survey.”
Additionally, banks were asked to report when standards reached their easiest and tightest points since 2005, the Fed said. Most banks reported that standards were easiest between 2005 and 2007 and tightest between 2008 and 2010, indicating that the ranges of standards in consideration have not changed significantly since 2011—the first year that special questions on the levels of standards were asked.