Demand for commercial and industrial (C&I) loans weakened in the third quarter of 2019 while demand for commercial real estate (CRE) lending remained unchanged from the previous quarter, according to quarterly survey results released Monday by the Federal Reserve.
The Fed said its October 2019 Senior Loan Officer Opinion Survey on Bank Lending Practices (updated Monday) – which addresses changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months (generally corresponding to the third quarter of 2019) – showed standards on C&I loans were “basically unchanged,” although demand dropped off.
For CRE loans, the report stated, banks said they had tightened standards, although demand was mostly unchanged.
For household loans, the report said demand for most categories of residential real estate (RRE) loans strengthened (and lending standards were basically unchanged). On credit card loans, demand also strengthened – and banks tightened standards.
In other reporting, the Fed survey said banks reported they were less likely to approve credit card and auto loan applications by borrower FICO score (in comparison with the beginning of the year) for borrowers with scores of 620. The banks reported they were about as likely to approve such loans for borrowers with FICO scores of 720 over this same period.
“Banks that indicated a reduced willingness to approve new loans cited increased concerns regarding new borrowers’ ability to consistently make payments on their loans, a less favorable or more uncertain economic outlook, and a reduced tolerance for risk as important reasons,” the report stated.