Banks kept standards lower for most loan categories, survey shows

Standards were eased for nearly all types of loans in the second quarter of the year, according to a survey of senior loan officers released Monday.

The Federal Reserve said results of its July 2021 senior loan officer opinion survey on bank lending practices eased standards for loans to businesses, commercial real estate (CRE), and loans to households, including residential real estate and three consumer loan categories: credit cards, autos, and all other.

The Fed said its survey results showed stronger demand for commercial and industrial (C&I) loans to firms of all sizes. On the commercial real estate (CRE) side, standards on multifamily and construction and land development loans eased. However, standards on loans secured by nonfarm nonresidential properties remained basically unchanged. Overall, banks reported stronger demand for all CRE loan categories.

On the household loans size, standards were eased across most residential real estate (RRE) loan categories (on net), the Fed reported. In the consumer loan categories (credit cards, autos, and the catch-all “others”), the central bank said standards were eased and stronger demand was also recorded.

Yet although standards have been lowered across most loan categories, they are not at their lowest, according to survey results. This latest survey also included some special questions, including when standards reached their highest and tightest points over the last 16 years. Most banks said standards were easiest between 2005 and 2007 and tightest between 2008 and 2010. That, the Fed said, indicates 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.”

Senior Loan Officer Opinion Survey on Bank Lending Practices