WASHINGTON–Lending standards for both credit cards and small business loans were tightened by banks during the third quarter, according to the Fed’s October 2024 Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices.
Regarding loans to businesses over the third quarter, survey respondents reported basically unchanged lending standards for commercial and industrial (C&I) loans to large and middle-market firms and tighter standards for loans to small firms. Meanwhile, banks reported weaker demand for C&I loans to firms of all sizes. Furthermore, banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories, the Federal Reserve said.
For loans to households, banks reported basically unchanged lending standards and weaker demand across most categories of residential real estate loans. In addition, banks reported basically unchanged lending standards and demand for home equity lines of credit.
“Moreover, standards reportedly tightened for credit card loans and remained basically unchanged for auto and other consumer loans, while demand weakened for auto and other consumer loans and remained basically unchanged for credit card loans,” the Fed stated.
The October SLOOS included a set of special questions about standards and demand for credit card loans across borrowers with different credit scores. Banks reported they were more likely to approve credit card loans to prime or super-prime borrowers and less likely to approve credit cards for near-prime and subprime borrowers, compared with the beginning of the year. In a second set of special questions, banks reported the level of demand for credit card loans was stronger in the third quarter of 2024 than before the pandemic (end of 2019) across most credit score categories and all dimensions of credit card demand—that is, demand for new cards, requests for increased credit limits, and utilization of existing credit. Banks forecast further strengthening in demand over the next six months, with an expected increase in borrower spending, as the most cited reason for their outlook, the Fed said.