Fed Beige Book notes continued, moderate loan growth across most regions

A report of anecdotal accounts in its 12 regions on economic conditions collected over several weeks before April 11 points to continued, if moderate, loan growth at banking institutions overall amid the broader, continued challenges in the supply chain, employment, inflation, and concerns about the impact of Russia’s war on Ukraine.

Following are brief summaries in the Federal Reserve’s latest Beige Book report from selected Fed district banks, focusing on banking and finance:

New York

Contacts in the broad finance sector reported little change in activity but remained fairly optimistic about the outlook. Small to medium-sized banks in the District reported little change in overall loan demand—lower for consumer loans and residential mortgages but higher for commercial mortgages. Credit standards were largely unchanged, while loan spreads widened somewhat. Finally, bankers reported lower delinquency rates on consumer loans and residential mortgages but no change on other types of loans.


The volume of bank lending (excluding credit cards) grew moderately during the period (not seasonally adjusted); by comparison, loan volumes grew at a more modest pace during the same period in 2019. Inflation is contributing to some of this growth.

Loan volumes grew moderately for home mortgages, auto lending, and commercial and industrial lending. Commercial real estate lending grew modestly, but home equity lines and other consumer loans fell modestly. A mortgage services contact noted that rising interest rates had dampened mortgage originations and precluded most home equity lending. Credit card volumes also grew moderately. Typically, credit card volumes fall during this season of the year.

Bankers, accountants, and attorneys noted that ongoing uncertainty and weariness stemming from inflation, COVID-19, and the war in Ukraine have created mental health issues for some households and small business owners. One attorney noted that foreclosures on residential mortgages rose following the end of the moratorium and that a further increase is expected. Another attorney noted that a credit counseling client was struggling to get out of bed. An accountant noted that one client was “completely absent from his business” because of the stress from uncertainty.


Loan demand increased moderately during the reporting period. Contacts reported increased business lending, especially for commercial and industrial loans, and many bankers reported strong loan pipelines. On the household side, some bankers noted a mixed effect of higher mortgage interest rates as demand for new originations increased while refinancing activity dropped. Demand for auto loans was slightly down because of limited vehicle inventories. Lenders said that delinquency rates for commercial and consumer loans remained low and that core deposits increased. Looking ahead, bankers expected business loan volumes to increase further as clients make capital investments, but they expected mortgage refinancing activity to slow further as interest rates rise.


Respondents continue to report strong loan demand across all commercial loan types, while residential mortgage demand has started to ease. Respondents noted that while the slowdown in residential mortgages was mainly due to low housing stocks, some potential buyers were deterred by rising interest rates. New auto lending was still being impacted from a lack of inventory, however, used auto lending demand was growing. Deposits continued to grow on pace with last year. Credit quality remained excellent, and delinquencies remained below pre-pandemic levels, but some respondents were seeing consumer loan delinquencies trending upwards.


Conditions at District financial institutions remained stable. Loan growth improved, with consumer lending experiencing the strongest growth among loan portfolios. Deposit balances were flat. Some banks reported increases in short-term borrowings to fund the stronger loan growth. Asset quality remained strong. Delinquency rates were stable for most portfolios and net charge-offs held steady. With the increase in loan growth, provisions for loan losses also slightly increased.


Financial conditions tightened some on balance over the reporting period. Participants in the equity and bond markets reported rising interest rates, an increase in volatility, and net declines in asset values. Business loan demand increased modestly, with growth spread across sectors. Contacts highlighted greater usage of lines of credit to finance inventories as well as growth in acquisition financing. Business loan quality was unchanged overall, while business loan standards tightened slightly. In consumer markets, loan demand decreased slightly, led by lower demand for mortgage lending. Consumer loan quality remained unchanged on balance, while standards tightened slightly.

St. Louis

Banking conditions have improved slightly since our previous report as banks reported an increase in overall lending activity. Commercial and industrial loans increased slightly, while consumer and real estate loans increased moderately. Deposit levels remained elevated, but deposit growth slowed. A Memphis banking contact reported an influx of customers asking to fix their adjustable-rate loans or extend their fixed-rate loans in light of the recent interest rate increase and uncertainty around future rates. At least one large lender continues to lend at low rates for long terms. Overall, banking contacts expect high liquidity throughout the system to keep downward pressure on interest rates.

Kansas City

Loan demand grew moderately over the past month as banking contacts highlighted increased levels of commercial real estate financing. Demand for commercial and industrial loans and residential mortgages were stable amid rising interest rates. Credit quality was unchanged and contacts did not anticipate material changes going forward, although some noted concerns related to agricultural input costs and the effects of rising interest rates on borrowers. Deposits grew moderately from historically high levels. Several contacts noted near-term risks stemming from rising inflation, elevated home prices, increased labor costs, and considerable economic uncertainty.


Loan demand continued to increase at a robust pace over the past six weeks, despite a sharp rise in loan pricing. Loan volume increases spanned lending types, and growth remained strongest for commercial real estate loans. Nonperforming loans continued to decrease, and credit standards and terms tightened slightly. Contacts expressed concerns about the effects of interest rate increases, inflation, rising wages, and staffing shortages. Respondents expect increases in loan demand and decreases in nonperforming loans over the next six months. While general business activity continued to improve, expectations for six months from now were mixed.

San Francisco

Lending activity remained unchanged on balance. Consumer and commercial loans increased somewhat, while demand for residential mortgages edged down due to higher rates. Additionally, consumer mortgage loan refinancing has started to slow down. The majority of bankers report a very competitive environment that prevents banks from raising rates on most lending products. Some banks have eased credit standards to compete for loan customers. Liquidity remained high, supported by a steady growth in deposits and lending. However, one contact in California noted slowing deposit growth due to waning COVID relief payments.

Fed Beige Book, April 20, 2022