Banks report tighter loan standards in second quarter for C&I, household borrowing – a 15-year high

Standards and terms were tightened on commercial and industrial (C&I) loans, as were those for loans to households, during the second quarter, according to a survey of senior bank loan officers released Monday.

The opinion survey of senior loan officers on bank lending practices, conducted approximately quarterly by the Federal Reserve, addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally corresponds to the second quarter of 2020.

The Fed said the survey results reveal that banks reported weaker demand for C&I loans from firms of all sizes during the reporting period. Meanwhile, the Fed said, banks tightened standards and reported weaker demand across all three major commercial real estate (CRE) loan categories – construction and land development loans, nonfarm nonresidential loans, and multifamily loans.

For loans to households, the Fed said the survey results showed standards for all categories of residential real estate (RRE) loans were tightened. Standards for the three consumer loan categories – credit cards, autos and other consumer loans – were also tightened. However, the survey also showed stronger demand for all categories of the RRE loans but weaker demand for all categories of consumer loans.

In a separate part of the survey, the Fed said banks reported that, on balance, their lending standards across all loan categories are now at the tighter end of the range of standards they have established over the 15-year period from 2005 to now.

The July 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices

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