Several Fed districts point to slowing loan growth, according to anecdotal Beige Book info

The “modest” national economic activity cited in the Federal Reserve’s latest Beige Book – a report compiling anecdotal information collected on or before Oct. 7 from contacts outside the Federal Reserve System – included declining loan volumes in most reporting districts, the Fed said in its report Wednesday.

The Fed, summarizing information received from the 12 Federal Reserve District Banks, said the reported decline in loan volumes was due partly to a decline in residential real estate lending.

The report includes information specifically about the financial services sector from 10 of the Fed’s 12 district banks. Most of these pointed to moderate to declining loan demand, and most often in residential real estate and consumer lending. Most also pointed to no change in credit standards. Reports were mixed on delinquency trends and on deposit growth.

Specific mention of slowing or weakening loan growth came from the New York, Cleveland (citing “stalled” loan growth), Richmond, Chicago, Kansas City, Dallas (reporting a decline “for the first time in nearly two years”), and San Francisco districts.

Overall, the Fed said rising mortgage rates and elevated house prices further weakened single-family starts and sales but helped buoy apartment leasing and rents, which generally remained high. It also pointed to slower growth in commercial real estate – both construction and sales – amid supply shortages and elevated construction and borrowing costs, and there were scattered reports of declining property prices. Industrial leasing remained robust, while office demand was tepid.

Beige Book – October 19, 2022